Old Digimon and Digimon who receive fatal wounds dissolve into infinitesimal bits of data. The data then recomposes itself as a Digitama and the Digimon goes through its life cycle again.
Did you think that age could not touch Digimon? How ridiculous. Humans die. Animals die. Plants die. Even Shinigami die. And for everything that dies, there is age, too. If things humans create can die, then Digimon, created by Humans, is no different. Digimon may last for a thousand years, but it cannot last forever. Of course it can't. After all, the word 'forever' is nothing more than a meaningless word born out of the fear of aging."