It forms chromium carbide and thus the chromium is no longer "free" in the steel and thus can not form the passive chromium oxide layer to protect the steel. This is why high carbon stainless steels in general are far less corrosion resistant than low carbon stainless steels of similar other alloy content.
-Cliff
Well, yea, but there are stainlesses with elements added that tie up carbon before Cr gets a chance. There are also steels with very low carbon, 316L and 304L, less than 0.05% and these will rust quickly in certain environments.