The video discusses a significant security vulnerability discovered in a compression library called lib XZ, which is used by OpenSSH, a tool for secure remote login. This library was maintained by a single developer, making it a potential weak point in the digital infrastructure. A new contributor, under the guise of helping, introduced a backdoor into the library. This backdoor allowed unauthorized commands to be executed on servers running SSHD, a daemon for handling SSH connections. The vulnerability was cleverly hidden in test files that expanded into malicious code when executed under specific conditions. The issue was discovered when a user noticed unusual slowdowns on their server, which led to the identification of the malicious code. The vulnerability was caught before it could be widely exploited, thanks to the vigilance of a user who noticed the anomaly and investigated further. This incident highlights the risks associated with relying on software maintained by a small number of individuals and the importance of thorough code review and security testing.