Hm... I had the same thought in the past as well because I had to take a over an issuse like that. Well, if the permissions are 777 then everybody who will be able to log in the server, as any kind of user, will have the right to do anything he wants to your files. Basically this can easily happen if there are various accounts on a web server and the users can "walk" from one directory to the other. For example, at my university we have space on a Unix system to upload our web pages. To the same server can log in all the students of the School of Computing. Having permissions as 777 to my files they are allowed to do everything they want.
That is all as far as I know. If there any other reasons I'd like to hear them.
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