How can this happen? 

There are three ways:

1. Intermarriage. Consider what happens (in a descendant chart) if second cousins marry, for instance. Each partner already appears in a separate leg of their great grandfather's descendant chart. After the marriage they also appear in their partners leg as a spouse. To clearly identify these as the same individual, they are given the numeric prefixes. In this way, even if there are several instances of individuals with the same name, this pair is unambiguously identified. 
2. Multiple Spouses. It is optional to denote individuals with multiple spouses this way in Outline Descendant Reports.  
3. Circuit. This is something to be avoided. The formal definition is "A circuit, or loop, is formed when a person appears in his own ancestor list." FTM has safeguards to prevent entering such an unnatural configuration but apparently a loophole, so to speak, exists in the GEDCOM import process that allows these monstrosities into an FTW file. 

Effects: When attempting to draw a tree or format a report, any number of generations can be included and the same set of individuals that form the circuit will appear over and over. This can cause significant processing delays in formatting reports, for example. 
Correction: Break the circuit at any point using Detach Child. If you examine a chart containing a circuit, you will see one line (or more) containing the bracketed numeric prefixes. The individual with [1] is closest to the initial point of the circuit, and is the place to begin examination.