How serious is 折杀 today? Foreigners in China naturally get a lot of kind compliments or treatment.  Sometimes the compliment is merely kind, and a person could reply with 哪里 or 别客气, or 不好意思了.  

But sometimes gesture is so overwhelming that you really want to say the person need not have done it -- but at the same time show that you appreciate it.  So I learned the phrase  折杀 which might be good for those times.

But when I look for it on-line I find a lot of sites explaining it and very few using it.  So I wonder if people do use it today.

Baidu calls it 民间用语：虚拟抬高别人生活状态的贬义用词。 I am not sure what they mean by 贬义.  It is really insulting?  Or is it just a little funny?

And I am not sure what they mean by 民间用语.  Does it just mean the phrase is colloquial?  Or does it mean the phrase is a bit quaint or old-fashioned?
折杀 is a folk saying. It is invoked as a humble response when receiving high compliments or a great gift that one considers himself not deserving of it.

In the olden time, Chinese believed one's fortune is tied to his deed and virtue, oversaw by the heaven. If you receive excessive reward in life that's not in an appropriate quantity or quality for your virtue, your fortune will balance things and make you suffer later in life. 

Similarly being immoral will reduce your fortune. That's why people sometimes refer immoral deed as '折福事' (things that reduce your fortune ) 


折 is short for 折福 (reduce fortune)
杀 = 'greatly' (to the point of killing me)
折杀 means 'it will greatly reduce my fortune'


If you receive a high praise or great gift that you think you are not worthy of,  you can say '这真是折杀我了' (this really will reduce my fortune greatly) to show your modesty and humility.

As you suspected, this term is a bit old fashion. You can only hear people saying that in period dramas on T.V or movies nowadays.