Its pretty much what it says...

For example, if the app has access to your contact data then it can read/write/delete your contacts. If it has access to the Network then it can use your data connection and potentialy cost you money. etc

All apps with access to your phone could potentially do lots of bad things, just like any software. You just need to decide if the app is built by a trustworthy source. The reviews will also give you some indication if there are issues with the app.

If you are worried about data usage then there are apps to monitor which programs are using bandwidth.

Richard