It loads a script into your remote which would allow someone to perform, silently, any command they want within your mIRC. This can have serious ramifications for your system due to the power of some mIRC commands (e.g. /remove, /run, etc.) Basically it's a
backdoor.
Infections such as these are not very common anymore due to the fact mIRC now locks the $decode identifier by default. So even if you had typed it (assuming you haven't manually unlocked $decode), it wouldn't have done anything.
Regards,