It's used in "Sharpe's Eagle". General Wessely tells Colonel Sir Henry Simmerson that "The South Essex [Regiment] is stood down in name. If I wipe the name I may wipe the shame." This is in response to a disastrous skirmish with a French patrol that led to the death of a respected major (captain in the book) and a rescue party being cut off, caused by Sir Henry's incompetence and cowardice (and then Sir Henry had the gall to lie to General Wessely's face about it, when his spy had already given him an accurate account). I think it means to be suspended or otherwise removed from official listings. I'm not certain, since despite saying he's making them a battalion of detachments, he lets the regiment's Light Company remain standing under the command of a new captain (Sharpe) and, as a kind of punishment, positions the regiment as the vanguard against a French column.

An example from "Sharpe's Eagle", set during the Napoleonic Wars. After a disastrous skirmish with the French, the South Essex regiment chief, Colonel Sir Simmerson, tries to lay blame on a major who was killed and otherwise thoroughly discredit him. General Wellesley sees right through it and after tearing him a new one, announces "The South Essex is stood down in name. If I wipe the name, I may wipe the shame. I am making you a battalion of detachments; you will fetch and carry. The Light Company put up a fight, so I will let it stand under the command of a new captain."

This leads me to believe that when you are stood down, that is someone stands you down instead of standing down yourself, you are effectively being suspended from your current active role, and it carries a punitive connotation compared to asking someone to stand down, which is more neutral and is effectively a synonym for "calm down" or "stop what you're doing".