The curl advisory describes this issue as follows:

curl supports SFTP transfers. curl's SFTP implementation offers a special feature in the path component of URLs: a tilde (~) character as the first path element in the path to denotes a path relative to the user's home directory. This is supported because of wording in the once proposed to-become RFC draft that was to dictate how SFTP URLs work.

Due to a bug, the handling of the tilde in SFTP path did however not only replace it when it is used stand-alone as the first path element but also wrongly when used as a mere prefix in the first element.

Using a path like /~2/foo when accessing a server using the user dan (with home directory /home/dan) would then quite surprisingly access the file /home/dan2/foo.

This can be taken advantage of to circumvent filtering or worse.