Why AT&T blocked 4Chan
Your computer--let's call it HOME--sends a SYN request to the Web Server (SYN for synchronize sequence numbers). In this case the server is img.4chan.org. 4Chan's server responds with an ACK flag (short for "acknowledge") and then your computer responds with a SYN-ACK and from there the connection is made.
In 4Chan's case, the attacker sent SYN requests with spoofed IP addresses. In other words, the requests appeared to come from some other computer or computers, for this example let's call it 127.55.55.127.
4Chan's server responded with an ACK, but since 127.55.55.127 never sent the SYN in the first place, it either sends an RST flag or more likely, nothing at all. And if 4CHAN gets nothing at all, it may send four or five ACKs for every SYN it receives. This whole scenario can take around 3 minutes to play out.
So, now you can see the problem. If the attacker is sending a bunch of SYN's from a bunch of spoofed addresses, the attacked server is going to run out of resources responding to them. The flood of traffic not only fills up 4Chan, but also floods innocent bystanders.
In 4Chan's case, some of these bystanders were in the AT&T network. Some were in other networks, like unWired Broadband. But since AT&T is the big kahuna, it got all the attention.
AT&T blocked all traffic coming from the 4Chan server sending out the ACK flags. This stopped the ACKs from flooding into AT&T's network, but also prevented any legitimate requests from its network to that 4Chan server.
A few AT&T subscribers who suddenly couldn't get to 4Chan figured AT&T was blocking the often controversial site. So they started grumbling.
4Chan complained that AT&T should have only filtered its server for the sites that had been spoofed. However, if AT&T had done that, and the attackers had caught on, they could have spoofed different IP addresses. AT&T was taking the rather cautious approach of blocking the entire server, making it irrelevant what IP addresses were spoofed.
4Chan did filter the DoS attack so that it didn't bring down its site, but it was still passing along the ACK requests that caused the trouble. Once it stopped that from happening, AT&T lifted the ban on img.4chan.org, and all went back to the peaceful happy land it had been before. Sort of. Well, except for the CNN iReport 4Chan users put up claiming the AT&T CEO was dead.