The names assigned to the named pipes are in a predictable sequence and therefore, could allow a malicious user could guess the name of the next instance of a particular service, and create a server-side named pipe for that service. The next time the specific service was started it would execute malicious code attached to the newly created named pipe. The malicious code would be executed within the security context normally assigned to that service. Services typically execute with LocalSystem privileges, but may also be executed under the security context of a particular predefined user account. The Service Control Manager is an administrative tool provided in Windows 2000 that allows system services to be created or modified.
Pipes allow processes to communicate with each other.
A pipe is an area of memory that two or more processes share. When Process A wants to communicate with Process B, it puts data into the shared memory and sets a semaphore telling Process B to read it. They can only exist locally. Named pipes, which allow bi-directional communication between multiple processes. The processes can reside on different machines.