it overwrites the document that the victim sees generated by their browser..
using the equivalent of
<script>document.body.innerHTML='new page html'</script>
so it's only modifying what the victim sees client-side. Nothing is rewritten on the web server itself. That is, unless you send commands to it with the victims access level using CSRF. For example, sending a request to 'Change Password to spaghetti' by injecting an iframe
<script>document.body.innerHTML='new page<iframe src="http://thatsite.com/changepass.php?newpass=spaghetti&confirm=spaghetti"></iframe>'</script>
So using that Stallowned page, you didn't actually 'hack' any server as nothing was changed on it and you didn't have root access to it. The legality of it is quite controversial right now.
-maluc