As the re-entry capsule fell towards the Earth, an equalization valve regulating air pressure malfunctioned (as many things on the station had). It opened too early and caused the pressure in the capsule to match that of space. The pod became a vacuum at 104 miles above the ground.
The cosmonauts died when the vacuum conditions inside their capsule hemorrhaged all the blood vessels in their brains. In seconds, they were knocked out. Minutes later, they were dead. Officially, their deaths occurred in space.
The Soviet Union posthumously awarded Dobrovolsky, Volkov, and Patsayev with Hero of the Soviet Union gold stars and held a ceremony honoring the cosmonauts. In the end, the USSR, America, and every space-faring country learned a valuable lesson from this tragedy.
Had the three men been wearing the appropriate gear, they would have survived. With that discovery, America and the USSR changed protocol to state that crewmen must always wear a pressurized suit when depressurization is possible. Those three men, thankfully, remain the only people to die in space.
From down on Earth, outer space holds doubtless wonders that we can only imagine, but those brave enough to explore it face some serious dangers. Hopefully, none will ever experience anything like those three cosmonauts did.
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h/t Boredom Therapy