What it does
When Mimikyu is in its Disguised form, the first damaging move that connects replaces the actual calculated damage with a flat 1/8 max HP loss. That hit breaks the disguise and changes Mimikyu to Busted form, after which it takes normal damage from all subsequent hits. Disguise does not protect against non-damaging moves, entry hazard damage from Spikes or Stealth Rock, or weather chip damage. The disguise is gone for the rest of the battle once broken — it does not reset between turns or when Mimikyu switches out.
Who runs it
Mimikyu runs Disguise at 100% usage — there is no other choice. Ghost/Fairy typing, 90 base Attack, 96 base Speed. The stats are decent on their own, but Disguise is what makes Mimikyu a real threat: it guarantees one uninterrupted action before taking meaningful damage.
How to use it
The free turn is the entire game plan. When Mimikyu comes in, the opponent's first damage move does almost nothing. Use that turn to Swords Dance for +2 Attack, swing Play Rough or Shadow Claw into a target before the disguise is broken, or use Will-O-Wisp to burn a physical attacker. In doubles, the disguise forces the opponent to spend resources specifically targeting Mimikyu to break it before doing anything useful, which buys time for your partner to act freely.
Tips & strategy
The hardest counter to Disguise is multi-hit moves. Bullet Seed or Rock Blast break the disguise on the first hit and continue dealing full damage on subsequent hits within the same turn — the entire disguise protection is bypassed in one move. Fake Out (when not blocked by Queenly Majesty) is a common way to burn the disguise for free, leaving Mimikyu in Busted form with no meaningful damage trade. Plan your Swords Dance turn to happen before the disguise is broken, not after — once you're in Busted form, you're just a frail attacker.