It presented a page which claimed to be an age flagged video - at the time youtube was having many problems with age flagging videos - and sure enough many people tried to login to it - they looked at the "(youtube.com)" text on reddit, they looked at their browser when they first clicked the link, but they never noticed when the URL changed to offsite when they had to login. It never struck them that a legitimate youtube link could have sent them offsite.
The solution most of those people arrived was simple though: use password managers which will force some extra suspicion if the login page doesn't behave as expected.
EDIT: Found the link and discussion, https://old.reddit.com/r/programming/comments/bpy7h/think_yo...
By the numbers it looks like about 1/2 the people who made it to the sign in page made it to the submit page. That's a pretty good result especially given that it's a technical subreddit and people were primed with "think you're immune to phishing attacks"...
That Reddit shows the domain name next to the link (HN also) is, I think, the key here—it casually set expectations. Most link situations won’t be like that, and so I’m broadly with tptacek, that it’s not actually so useful. Plus, businesses commonly use all sorts of different domains, rather than subdomains, and something like yourbank-security.com instead of yourbank.com may not even raise eyebrows—to say nothing of people probably not even twitching at login.yourbank.com.evil.com anyway.
I agree that the impact is low compared to other vulnerabilities. It is definitely the case that you get a t-shirt (at best) for it. Though, my point is that they could be critical for the users, not for the website itself. An attacker that don't really care about the vulnerable website can still exploit the trust in the vulnerable website to perform attacks on the user he is interested in (e.g. hash stealing or malicious redirects). In fact, I believe malicious redirects is a really common payload of XSS flaws.
I guess if your argument is that there would be high value in eradicating open redirects wholesale, I sort of see your point. But the incremental value of eliminating one open redirect is marginal at best.
I don't think Toys R Us was ever harmed but it was mildly amusing and I'm sure a few people's panties got knotted after they found out Toys R Us doesn't actually sell firearms and they got all enraged over nothing.
Open redirects are worth fixing, but they're a lot more common than I think people expect they are. I think the severity:low the "good" (unconstrained, straightforward links, persistent, across all browsers) ones get is well measured.
I see open redirects as sort of the archetype of the "t-shirt vulnerability" --- the one the bug bounty sends you swag, instead of cash, for finding.