MMORPG developers nerf aspects of the game in order to maintain game balance. Occasionally a new feature (such as an item, class, skill, etc.) may be made too powerful, too cheap, or too easily obtained to the extent that it unbalances the game system itself. This is sometimes due to an unforseen bug or method of using or acquiring the object that was not considered by the developers. The developers may have intended that a player perform steps A, B and C to get the item, but players may accidently discover that they can skip steps A and B and simply do step C to gain the reward.
More often though nerfs are implemented as an anti-botting tactic. This tactic is favored because it is easily implemented, although it has dubious effect on botting and generally harms legitimate players more than the botters.
A classic scenario is a situation where a player runs a bot to gather items of loot by killing monsters repeatedly. Nerfing the loot's drop rate on the monsters harms legitimate players by decreasing the reward for their play time, while it generally affects bots little because the time would simply have been wasted and so any reward at all is sufficient to induce continued botting. In addition, excessive nerfing can often frustrate legitimate players to the point where they begin botting simply so they can spend their play time playing instead of constantly gathering resources. Additionally, there are many professional players that play for the explicit purpose of gathering resources to sell on-line at places such as eBay. Nerfing the drop rate of an item merely increases the scarcity, driving up the price, and increasing the profits from botting in this manner.
Sometimes designers nerf things that are particularly useful in powerleveling.