Security breaches of networks due to weak passwords are a daily occurrance. All it takes is for ONE account to be compromised and then the password cracker has a much better chance of obtaining the site's password file and use password cracking software on it. At Coinet, the risk of this is mitigated a great deal because we do not allow direct login access by users to our servers. That fact does not diminish the need for good passwords, however.
The password cracker uses a program to check each user's password, which is stored encrypted in the password file, against a list of dictionary words. If the cracker is good, he will have a huge dictionary, which increases his chances of getting a match. If your password is in his dictionary, then it will be found.
The dictionary attack works well, because a brute force method, i.e. trying to decrypt a user's password using all possible combinations, could take thousands of years. This is why your password is quite secure if it's not too simple or based on a dictionary word.