exploit is the method they used to hack the iPod touch (and iPhone) something like being able to create a buffer overflow using the process by which safari opens up .Tiff image files
Anyway it's the way to get inside the mobile OS X - so far hackers have been using ti for good...but someone could also use it to insert say a virus into your touch or iPhone, so they created a patch that removes the exploit AFTER you use it or hacking of course