Test Condition: An item or event of a component or system that could be verified by one or more test cases, e.g., a function, transaction, feature, quality attribute or structural element.
For example: Test Object: Login form
Test Item: Login authentication
Test Condition: 1) both username and password are blank 2) username is blank, password is invalid ..... and so on
A test condition is simply something that we could test.
While identifying the test conditions we want to identify as many conditions as we can and then we select about which one to take forward and combine into test cases. We could call them test possibilities.