Stress certainly weakens fish and depresses their immune systems; they gradually decline, usually contracting one or more diseases as the deconditioning progresses. Then, when dead or nearly so, they just get picked on, chewed, mauled and otherwise mutilated by many fish which weren't and aren't actually aggressive
per se, but are rather simply...eating...
But the situation you are describing...everything is peachy at breakfast time, and then by supper you have a rotting corpse...is almost a specialty problem presented to cichlid owners, as well as those keeping a few other types of borderline-psychotic fish; piranhas, sunfish, maybe wolffish...
The story is very common. A guy loves cichlids, and decides that somehow
his 100-gallon tank is different than all the others in the hobby, and so everything he has read about cichlids can be disregarded. A bunch of 1-inch cichlids go in, often species that are known to be very aggressive, and usually ones where each single individual will outgrow the tank within a year...but the tank has about a dozen of them. They "get along fine" for awhile, eating and growing and developing into mature killers, maybe pairing up and trying to breed, or maybe just getting bigger and crankier and more inclined to not play nice with others. Each one looks around thinking "This space is all mine!", probably interspersed with notions of "I can take that guy!" and "You're in my spot!"
One day the biggest...which usually also translates into the nastiest...just decides he has had enough, and goes on a rampage. Much blood, many deaths. Our hero comes home from work, looks into his tank...in which apparently nobody is continuing to "get along fine"...and wonders what happened...
Usually, the aquarist will start a thread, sometimes replete with pics of partial fish and empty eye-sockets and torn fins. The same day, another hobbyist will read that thread, decide "Nah...that guy did something wrong...that'll never happen to me!" and will immediately traipse off to the LFS, where he will buy 4 Jaguars, 4 Red Devils, a Flowerhorn, a Dovii and maybe a couple Piranhas 'cuz they're just
so cool...
He might even know what's going to happen, but isn't concerned because, after all, these fish are just going into a "grow-out tank" and will eventually move into that 500-gallon he is planning on building after he moves...
...and so the Wheel of MFK begins another rotation...
As to how they physically do it, well...you've seen cichlids lip-locking as they sort out dominance issues and breeding hierarchies. When one of them is big, tough and psychotic...i.e. has grown into a typical adult male cichlid...and when the other one can never get more than a couple feet away, because 100 gallons or so just isn't that big compared to any natural environment and simply doesn't allow the loser to get away...lip-locking turns into grabbing whatever part of the sub-dominant fish can be grabbed, and simply shaking and biting until that part comes off. The loser isn't fighting anymore...it's instinctively trying to get away, but simply has nowhere to go.
When that unlucky fish stops moving, the big guy takes a breath, looks around, and then it's..."Hey! What are
you looking at???" and away we go again.
Cichlids are great, aren't they?

Personally, I just find most of them too stressful; I don't want to fretfully check each tank every day hoping that "it" didn't finally happen...but "it" happens too often for my taste, so I just avoid most of them.