Like many other gaming consoles, you can only run software that is approved by the manufacturer on it. To run your own software ("homebrew"), one has to exploit flaws in the OS and use them to remove these restrictions. One side effect of homebrew is that it often leads to piracy of approved software.
One of the most common step-by-step guides that help users install homebrew uses an exploit called Bannerbomb3 to run the installer. [0] By inserting a malformed DSiWare application onto the SD card, the System Settings app can be crashed in such a way that facilitates arbitrary code execution. The loaded program is then used to install custom firmware.
In March 2023, Nintendo shut down the eShop, the digital software storefront for the Nintendo 3DS, effectively ending most support for the console. After this happened, many people started advocating homebrew-ing 3DSes to allow pirated software to be installed on them, since purchasing software digitally could no longer be done.
Now, 2 months later, Nintendo has decided to issue a firmware update that patches the Bannerbomb3 exploit, preventing new 3DS systems from being homebrewed in this fashion if they are on the latest firmware. (It should be noted that there are many, many more exploits for the 3DS [1], so I'm not sure why they've decided to fix this exact one.)
Homebrew on Nintendo consoles has always had a really interesting scene but it really took off with the Wii and everything after it. Hackers would keep finding ways to get into everything and Nintendo would hastily patch it up in a sort of live cat and mouse game. The exploit that Nintendo patched just recently is not hard to do, but older exploits were even easier. One of the earlier 3DS exploits was to simply drop a modified audio file onto your SD card and play it in the 3DS audio player. You would own the whole device in ten seconds flat.