Denial is the rejection, neglect, or refuting of an idea presented on stage. It is taught as the categorical opposite of Yes, And, and is therefore, in many circles, the only "undoable" thing in improvisational theatre: no matter the circumstance, an improviser should never deny her fellow improvisers' ideas.
"Denial" vs. "No"
To say that an improviser can never deny her partner is not to say that improvisers are not allowed to say "no" in scenes. It is an a performer's obligation to accept the contextual meaning of everything presented to them, but their opinion about it is not pre-decided. It is often taught that characters do not always have to be in agreement, but improvisers do. For example, a character can refuse to meet the demand of another character ("Eat this apple") without denying an offer ("I'd rather eat a banana."). To deny an offer ("That's not an apple, that's a stuffed animal - I would never eat a stuffed animal!") is an entirely different choice. Will Hines writes on his blog Improv Nonsense about this idea in an entry entitled "Saying No To Offensive Things."
Much of Game-centered improv relies upon a Straight Man ability to remain skeptical in the face of an unusual thing, and this often requires characters to be less than enthusiastic about their partner's ideas. The improvisers playing these characters are in full agreement, of course, but that agreement has obligated the Straight Man to be critical of the Game-centered character's ideas. Improv theory laid out in the UCB Manual suggests that comedy is born out of this juxtaposition of absurdity with reality - a grounded, human perspective is needed to communicate how funny the bizarre behavior is.