When a PHP application is run in PHP 4 it can overflow the variable reference counter because it is only 16 bit wide. Whenever this happens it will result in a double destruction of the underlying variable. A local attacker can easily create PHP code that uses such a double destruction to execute arbitrary code within the process executing PHP (e.g. webserver process). This allows bypassing restrictions enforced by disable_functions, open_basedir, SAFE_MODE or to launch direct local root exploits against the target system.
The patch [tar.gz] fixes the issue and keeps from breaking anything from the past (backwards compatibility). You can either grab it now and apply it to your distribution (the sooner the better) or wait until it gets merged into the PHP CVS version and released with the next bug fix release.