Does it mean the same as to eliminate or disarm the threat or does it mean that the malware was activated/executed (whether it reached its target or detonated in a "controlled" manner, e.g., in a sandboxed environment)?
"Detonating malware" means that the marketing team behind the product you are reading about realized that they need to figure out new catchy terms to get your attention. After hours of creative meetings they came up with the (wrong) malware-explosive analogy and decided to use the word "detonation" to describe a random event of the overly simplified scenario sketched up on their whiteboard.
Depending on who you ask (and what side of the fence you are on) it can mean two different things in my experience.
First (and most accurate in my opinion), is that that a payload will be triggered in a sandboxed environment to isolate and analyze it. Researchers and vendors will do this to to identify if a particular payload contains malware and then try and learn from it.
On the other side of the fence, it could mean that a piece of malware has been sitting dormant and given a specific input or condition it will be triggered and do whatever it was designed to do.