Substation by context is to replace one thing with another and deflation by definition is the decrease in circulated money in an economy.
Substitution deflation can be thought of as the effects of an alternative monetary system to fiat money. A famous example of this is the gold standard. The gold standard was once a system whereby the value of a currency was backed by gold. When the value of a currency couldn't be backed up by gold yet more was needed and hence printed, it slowly deviated from this standard.
When Bitcoin first started gaining media attention, it was often be referred to as 'internet gold'. This was because both had a finite number of supply and was also seen as a means of storing wealth due to its intrinsic value.
If Bitcoin is leading the pact for futuristic economy it is certain to replace fiat money, it is an entirely plausible idea to see this as a means of substitution deflation for the foreseeable future.