Camouflage is a status which prevents other people from attacking you for a period of time. You lose the Camo when the time runs out, or when you attack another island via the enemies list or retaliation. Camo is not lost when battling during Alliance Warfare.
When your base is destroyed by an enemy attack, you automatically get Camo for at least an hour. You can also purchase longer-lasting Camo from the Treasury.