Basically it describes a piece of software called iextreme which is used to boot the xbox and allow it to play modded games. It is able to detect if anything goes awry with the boot process, which apparently would tip off MS that you're using a pirated game, and then shut down before your ip address gets reported. I mean, that's what I think it says, but my Navajo is rusty.
Of course, piracy is bad, don't do it
. It hurts the poor defenseless game companies, and probably helps terrorists win or whatever. So just don't okay?