Kernicterus is damage to the brain centers of infants caused by jaundice. Newborn babies are often polycythemic, meaning they have too many red blood cells. When they break down the cells, one of the by-products is bilirubin, which circulates in the blood, and causes jaundice.
In adults and older children, jaundice is harmless in and of itself. But the tissues protecting the brain (the blood-brain barrier) are immature in newborns. The bilirubin penetrates the brain, and literally stains the nerve bodies, causing irreversible damage. Depending on the level of exposure, the effects range from unnoticeable to severe brain damage.