This vulnerability allows attackers to disrupt availability of applications using libxml2 through denial of service attacks. It is caused by improper processing of XML files containing predefined entity definitions by libxml2 versions 2.7.0 and 2.7.1. Successful attacks can exhaust all CPU, memory, and disk resources, making affected systems and applications unavailable. It resembles the "Billion Laughs" XML bomb vulnerability from 2003. Organizations should upgrade to libxml2 2.7.2 and implement input validation and access restrictions to mitigate risks.