And slay them wherever ye find them, and drive them out of the places whence they drove you out, for persecution is worse than slaughter. And fight not with them at the Inviolable Place of Worship until they first attack you there, but if they attack you (there) then slay them. Such is the reward of disbelievers. (Same thing but of Pickthall's translation)
And basic definition of persecution is
hostility and ill-treatment, especially because of race or political or religious beliefs. (Oxford Dictionary)
why is it condemned more than murder?
To answer this I would take help of a quote from wiki's definition of Fitna,
Fitna as persecution appears in several of the verses commanding Muslims to fight the unbelievers (specifically referring to the Meccan polytheists who had persecuted Muhammad and his early followers, thus leading to the hijra). For example, in Qur'an 2:191, the command to fight is justified on the grounds that "persecution (al-fitnatu) is worse than slaying." Similarly, in Qur'an 2:193, Muslims are forbidden from fighting unbelievers around the Holy Mosque in Mecca unless the unbelievers attack first, in which case Muslims are to fight "until there is no persecution (fitnatun) and the religion is God's." (Wikipedia)
So, the basic thing which we can infer is that persecution is disliked by Allah, whether it be done by the believers to the non believers (or) done by non-believers to the believers. And the rest lies in the exegesis of the verse further explaining it.
May the creator guide us all.