A Fork Bomb works by using the fork() call to create a new process which is a copy of the original. By doing this repeatedly, all available processes on the machine can be taken up.
Fork Bomb (Wikipedia)
In computing, a fork bomb (also called rabbit virus or wabbit) is a denial-of-service attack wherein a process continually replicates itself to deplete available system resources, slowing down or crashing the system due to resource starvation.