One thing I forgot to mention in an earlier article is that you can also block sites from being accessed with the hosts file. 127.0.0.1 is the address for your local computer. So when an address of say www.facebook.com is associated with the local host and then accessed, it will bring you back to your local machine. Good way to keep people off unwanted sites. In fact, you can down load a list of sites that are generally not good for your system at: (you will have to modify it for your needs).
The main story:
According to http://www.h-online.com/security/news/item/Microsoft-s-security-software-modifies-HOSTS-file-1670927.html/ The biggest gripe is that if you have www.facebook.com and certain other sitess blocked, Microsoft will modify your hosts file to re-enable it. Here is an example before modification.
What bothers a lot of people is that what gives Microsoft the right to modify such files. Many people are outraged at such activity and have vowed to no longer use Microsoft products. Many people have already planned to disable Microsoft's security software in place of something else that is not so invasive.
There are actually other ways around this. Most of the routers running third party software have a built in dns server called dnsmasq where you can set up sites not to be accessed. You could either set up a virtual machine or take a minimal system running linux or bsd to set up dnsmasq also. With both Nix based systems and Microsoft products you can set up what is known as a proxy server to do the same thing. Not sure whether Microsoft would re-enable such sites on their proxy servers.
There is also server software for the nix environment called Squid and DansGaurdian which is used heavily in the educational environment. To protect kids. we use it on our ltsp server to just for that kind of protection, Do not believe as of now that Microsoft has access to control such software. Our setup (we use tinyproxy instead of squid though): http://www.instructables.com/id/Another-almost-free-computers-thin-client-set-up-P/