Basically, on a site with user-generated content—like a hosted blog—it’s possible to add a form that looks like the site’s login form. If the victim has an account on the same site, and has asked their browser to save their password, it will auto-fill the form. If the attacker can somehow trick the visitor into submitting the form—say, with an invisible image submit button (ever clicked randomly? Or to get back to the page after looking at another window?)—the attacker gets the visitor’s password.
What’s new about this is that all it requires is plain HTML, not scripting, which most blog hosts and similar sites already block.
Chapin Information Services discovered the bug in Firefox 2, and reported it to Mozilla. It turns out that Internet Explorer 6 and 7 are also vulnerable, but only if it’s on the same page as the real login form. Mozilla is currently trying to determine the best way of resolving the problem without breaking all the passwords people have already saved. The ISC article links to the bug report, so you can follow the discussion. Microsoft has only said that they’re “aware of the issue.”
At the moment, I’m glad I don’t let web browsers save my passwords.