Metatheatric deconstruction is most simply described as "a play within a play". Events in the "inside" play deconstruct
the "outside" play. That is to say, motives
of characters in the "outside" play are explained by the actions of their characters on the "inside" play.
Although the term may be new, the idea isn't. Shakespeare's plays are full of examples - for instance in Henry IV part I, Prince Hal and Falstaff act out a play where Hal plays his father, the King, and Falstaff plays Prince Hal. "Prince Hal" begs the "King" not to banish Falstaff, and "The King" says "I do. I will". This foreshadows events in Henry IV part 2 where Prince Hal, upon accession to the throne, does indeed banish Falstaff, the latter having served his purpose of educating the future King in the ways of the commoners.
Metatheatric Deconstruction can also be used to cause the viewers of the play to question themselves, and involve them in the play, rather than simply sit back as viewers. Because the characters in the "outside" play are illustrated by the "inside" play, so we too as viewers of the "outside" play can be illustrated by corollary.
Metatheatric Deconstruction is not limited to plays, of course. Movies and books also use this concept.
Indeed, "The Blind Assassin" by Margaret Atwood has yet another level of "nesting" - The main character in the book is reading a book about the authors of a science fiction story! In other words, there is a "book within a book within a book".