The kmod kernel feature allows the kernel to dynamically load kernel modules if functionality is required that is not present in the running kernel. It does this by invoking the modprobe command with the requested module as parameter. This parameter can be influenced by users, for example by opening a currently non-existing files on a devfs filesystem, or trying to access a non-existing network interface. Since modprobe did not properly escape shell meta-characters when calling external commands or check if the last parameters was an option instead of a modulename, users can cause it to run arbitrary commands.
This has been fixed in version 2.3.11-12 and we recommend that you upgrade your modutils package immediately.