According to this security advisory there are two vulnerabilities that affect Apple iOS for iPhone, iPad, and iPod that are making this possible:
The first issue is caused by a memory corruption error when processing Compact Font Format (CFF) data within a PDF document, which could be exploited by attackers to execute arbitrary code by tricking a user into visiting a specially crafted web page using Mobile Safari.
The second vulnerability is caused by an error in the kernel, which could allow attackers to gain elevated privileges and bypass sandbox restrictions.
Note: These flaws are currently being exploited by jailbreakme to remotely jailbreak Apple devices.
This makes the www.jailbreakme.com Web site work much the same way a drive-by Web exploit works, but only with permission of the user. So maybe we dub this service a "drive-through" exploit :-)
Now, thanks to a recent decision by the Copyright Office and Librarian of Congress regarding the Digital Millennium Copyright Act (DMCA) - jailbreaking one's iPhone is now legal. Though could result in losing your Apple warranty. While I welcome this DMCA decision, as we should be able to tinker with our gadgets, I do think this jailbreak method raises a security concern.
This is encouraging users to visit a web site to actually have their device hacked. I've no reason to believe that anything more is going on at jailbreakme.com than the rooting of the iOS devices - but exploiting these vulnerabilities does enable remote users to gain control of the device. So it's quite easy to see how malicious attackers could socially engineer users to "jailbreak" their device and also insert a keystroke logger, traffic sniffer, of bot onto the iPhone, iPod, or iPad.
Just as it's not a great idea for credit card companies and banks to e-mail users links back to their sites within e-mails, as it makes it easier for phishers to lure customers to malicious sites: it's not a good idea to have people going to web sites to have their phones jailbroken.
Speaking of malicious attackers: These vulnerabilities make it very easy to hack an iOS powered device by merely opening an Adobe PDF file. So I'd suggest avoiding them completely on the Web until Apple issues a patch.
Apple is currently "looking into" the report of the software vulnerabilities, according to this post by AppleInsider. I'd expect a patch to become available soon.
For my security and technology tweets throughout the day, find me on Twitter.