Equipped real friendly champion loses all AP. When this champion successfully deals damage on a basic attack to a non-Avatar champion with an opposing owner, both champions and this equipment are destroyed (the source of the destruction effect is this equipment, not the equipped champion).
This rune is expensive if you include killing your own champion, but it's useful for destroying hard-to-destroy champions. It also sees play when running Unstoppable champions (such as Sand Elemental) as they are immune to losing AP from this.
Note that the rune has to damage to work, so if the champion is Resilient, Impervious, has Righteous Deflection, or so on, Forbidden Fruit won't trigger. Check to make sure that you will damage the champion before attacking.
Also note the rune mentions owner; you can't Possess an opposing champion and use Forbidden Fruit to kill another opposing champion because both of your opponent's runes are owned by him. (This also means if the damage is deflected to another champion with the same owner, this will not trigger.)
There are several using this rune to make the sacrifice of a champion more efficient.
Example: "Fruity Skeleton" - This is simply the most efficient method of using an unstoppable champion to get the fruit kill, as the Decayed Mercenary is the least expensive champion with unstoppable. Additionally, the Skeletal Raider drops a Decayed Mercenary upon dying. Because the enemy is likely to have used champions nearby the deceased skeletal raider to kill it, it is common for the mercenary that it spawns to be able to get a hit on an enemy champion. With a forbidden fruit, that is all that you'd need.