Homozygous lethal
Homozygous lethal means a gene variant is fatal when an individual carries two copies of it. In the Chinese Crested this applies to the hairlessness mutation in FOXI3: puppies with two copies do not survive.
Why are dogs with one copy healthy in this respect?
The mutation is dominant, so one copy gives hairlessness without being lethal. Only two copies are incompatible with life.
Consequence for breeding
Hairless dogs are bred to powderpuffs in practice. See the genetics article Genetics part 2.