In a nutshell, worm technology works by infecting a host and then using it to scan for more victims. The damage caused by the recent worm outbreaks isn't so much to the victim computer as it is to the networks in which they operate. The side-effect of propagation is that massive amounts of bandwidth are consumed as the infected hosts perform their scanning. The speed at which they are able to compromise new hosts grows exponentially, eventually causing a network meltdown.
In the future, worms could carry more damaging payloads, doing things like deleting files, installing network sniffers, or stealing confidential files. However, there is a fine balance between being overly destructive and fast to propagate, because just like in nature, a worm or virus that kills its host too quickly cannot effectively spread.
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