Remember the game "duck hunt" (the old nintendos)?? You aimed a "light gun" at your television screen and it registered where you hit? How'd that work?? Well, the gun was sort of like a laser or very focused flashlight. Essentially, when you shined it on the television, the television knew where it was being hit with that beam. Remember, the television had to figure out which light that was hitting it came from the gun, and which light hitting it came from other things in the room. That the light was "invisible" doesn't matter - it's still an electromagnetic wave, just with a slightly different frequency. Now the part that you have to think about: this didn't take a special television. The regular television you had was somehow sending a signal backwards in the line, and the nintendo game system (quite primitive compared to today's game systems) was somehow able to calculate exactly where on your television that it was being hit by light from the gun.
Now, this was early 1970's technology. In the last 30 years, technology has increased at an exponential rate. If the processing power of a cheap game connected by a cable to the back of a television was sufficient to determine where a particular wavelength of light hit the television screen, it's pretty simple to realize that with today's games, it really shouldn't be that difficult to process the signal sent backwards from the television to determine what wavelengths/frequencies of light are hitting the television, and where they're hitting the television. It doesn't take a rocket scientist to figure out that with the massively faster computing power, the television can be turned into a rudimentary camera. Then again, who knows what kind of resolution can be digitally calculated using the signal that the television passively sends backwards through the cable connected to it.
In short: 30 years ago, your television sat there. A lightgun was pointed at it, and a device connected via a cable from the back of your television was able to determine where on your television a particular color of light was hitting it. Today, the little box is being bypassed. With more sensitive equipment, "they" can see exactly what's going on in your living room while you're watching tv.
They're watching you! (Oh, and the guy watching you has probably just bumped a key on his keyboard or something; that's why you see the extra characters on your television. This is no different than when the nintendo was painting the entire duck hunt scene on your tv.
Did use it as an excuse to buy a 42" Panny plasma though 
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