I came across the phrase Drop Dead Gorgeous which means very gorgeous or good-looking.
Why does the above phrase have this meaning? How do the given words relate to the meaning?
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Drop dead works as an intensifier in this phrase. The reference to death isn't literal; it's a hyperbolic expression meant to emphasize how incredibly stunning the speaker finds the person being described.
It's thematically akin to phrases like "I am so [adjective] I could die" (common examples: "hungry," "happy") or "I'm bored to death."
A first degree paraphrase of:
This person is drop dead gorgeous.
This person is so gorgeous that I could drop dead.
That is, "drop dead" is a description of the reaction of onlookers: they could drop dead due to the shock of seeing such a gorgeous person.
There are other similar expressions in English: shockingly, stunningly, and they are all tied to physical reactions that onlookers could experience (and display).
Imagine a teenage popstar walking down a mall, and the ripples it would create in the crowd: