Definition of fear equity
The "fear equity" is a phenomenon especially applicable in tournaments. Imagine that you are on the final table of a tournament. You have 12 big blinds, but 2 players have less than big blinds than you. And you're sitting to the left of the chip leader who is giving you a hard time in the blinds. If he's abusing his stack to steal your blinds and you're too conservative (since you want to let the two smaller stacks go out before you do), you're in the fear equity (the chip leader is taking advantage of your fear). The chipleader uses his stack to intimidate the other players.
The bigger the tournament, the bigger the fear equity.
If you're on the final table of your life at the World Series of Poker, you know that the fear equity (the extra equity the chip leader will have) will be even more intense. The bigger the tournament, the more cautious players will be when playing against the chip leader. The fear equity won't be huge in a $1 tournament, but the bigger the tournament, the more likely you are to abuse a big stack, especially when playing against small stacks.