Basically, a dev wrote a game without ads. Then he realized that sites were stealing it, by embedding the game in an iFrame on their own site. An iFrame is simply a way for a site to embed another site within itself. Just like how YouTube videos can be embedded and watched on other sites. The other sites were plagiarizing this game then wrapping the game page in ads.

So the dev added some code to check if it was in an iFrame. If the game detected that it was in an iFrame, it would display Goatse instead of the actual game. So a bunch of game sites suddenly had active links to Goatse.