In the context of this book, the meaning of this saying is that dead men cannot possibly come back and cause trouble for the living.
This line is spoken in Chapter 11 when some of the pirates are discussing when they will mutiny and what they will do with the officers and such after they have taken over the ship. They are talking about whether to maroon the officers or whether to simply kill them. Israel says that Billy Bones would have killed them because "dead men don't bite." Silver then agrees that that is the best course of action. He backs that up with an explanation that shows the meaning of this quote. He says:
When I'm in Parlyment and riding in my coach, I don't want none of these sea-lawyers in the cabin a-coming home, unlooked for, like the devil at prayers.
In other words, when he is rich with the money they get on this voyage, he does not want one of the officers showing up and ruining things for him.
So, this phrase means that dead men cannot come back and cause trouble the way that living men could.
In Chapter 11 of Robert Louis Stevenson's classic Treasure Island, Israel Hands, Dick and Long John Silver are discussing the mutiny they are planning against Captain Smollett and those aboard the Hispaniola likely to remain loyal to the captain. They have to be cautious, lest the captain learn of their plans and hang them. During this discussion, they contemplate the fate of those they plan to subdue, with murder a viable option. It is in this context that Israel, responding to the cook's and Dick's queries as to how they will deal with the captain and his followers that the following quote is uttered:"‘Billy was the man for that,’ said Israel. ‘Dead men don’t bite,’ says he." What Israel Hands is saying is that, if the captain and others are killed rather than released, even if left abandoned on an island, they will never again pose a threat to the conspirators. Killing their victims will eliminate any chances that the captain and other sailors will be a problem in the future.
The phrase "mortui non mordent" translates as "dead men tale no tales," as "dead men don't bite." It is an old Latin phrase that is used to reaffirm the wisdom of killing one's enemies or victims. Once dead, those victims will not be around to testify about the perpetrator's conduct or deeds, and they won't be alive to exact revenge.