Many programming languages, such as php, are able to read files and process them to generate dynamic HTML pages.
This feature can be hijacked by user crafted variable.

For exemple:
The URI http://10.10.10.11/index.php?page=login.php is sent to the server. The server receive the request extract the page field 'login.php' and process this file to generate the HTML login page.

Let replace 'login.php' by another file such as '/etc/passwd', that will be processed by php.

http://10.10.10.11/index.php?page=/etc/passwd

Php commands are enclosed between <?php and ?> tags. When parsing a file without those tags, php simply print the file content.