At a very basic level, the steel in knife blades consists of two parts, the actual steel itself which is the vast majority, and very small clumps called carbides which are carbon bonded to either iron or some alloying element. Think of it like concrete is a mix of sand (the steel) and rocks (the carbides).
The carbides are *much* harder than the steel, they can in fact be harder than several types of sharpening stones. Many alloying elements like Chromium and Vanadium can form carbides, some are stronger carbide formers than others and in fact even prevent others from doing it, or even break down the other carbides and carbide themselves.
Chromium is one of the weaker and softer carbides, but still significantly harder than the steel itself. If you add a lot of carbon then the chromium won't be free in the steel but bound up by the carbon in the carbides. If it isn't free then it can't form the oxide layer by combining with oxygen which is what protects from corrosion.
It is a nice steel though for cutting knives, working best in very thin profiles to take advantage of its strengths, though M2 is a much better choice but much harder to heat treat as it requires much hotter temperatures, but many just grind it as hardened from power hacksaw blades.
-Cliff