Mental capacity is the ability to make a decision. A person can lack mental capacity if he has an injury, disorder or condition (eg. stroke, coma) that affects the way his mind works. He will have difficulty making decisions all of the time or that it might take him a long time to make a decision.
This could be a decision that affects daily life, for example, what to wear or more significant decisions, for example, whether to undergo a surgical procedure or purchase an investment.