Effect of Voltage sag on IT Equipment
What would happen if there were a voltage sag on 40%. the incoming voltage would drip from 208V to 125V. Would this cause my IT equipment to fail?


No.

The wide input voltage rating means that it is using switched-mode technology. The mains voltage is rectified and then "chopped" or switched at high frequency into a small transformer and stepped down the the required output voltage(s). As mains voltage or load varies the onboard voltage regulator adjusts the switching to maintain the required output.



Figure 1. Switched mode power supply block diagram. Source: Wikipedia.

Note that since power = volts x amps (\$ P = VI \$) that for a given output power requirement the input current will increase as the input voltage drops.