Enterprising thieves figured out that one of the things you could do was redefine functions, in particular the 'RemoveExtraSpaces' function that gets run against every chat line. If you set RemoveExtraSpaces=RunScript you've told WoW to execute every chat message displayed in your terminal.
Attackers just have to trick you into writing "/run RemoveExtraSpaces=RunScript" into your terminal, and after that all they had to do was chat code to you and it would execute. They basically get full control of anything lua can do in your game -- including sending messages to your friends asking them to also run the attack command.