Cupped tires are dangerous because the scalloped wear pattern in the tread reduces the surface area of the tire that touches the ground at any given moment. This can result in reduced traction and an uneven ride, especially in rainy, icy or otherwise slick conditions where grip is important.
Cupped tires are usually caused by a defect in the car's suspension. As the car drives, the struts cause the tires to bounce up and down, resulting in more wear in certain spots. Cheap tires may also be prone to cupping, as the rubber may be uneven in construction and weaker spots may wear faster than stronger ones. If the cause lies in a suspension problem, however, replacing the tires is a temporary fix at best.
Stopping and cornering quickly requires friction between the tire and the road surface. Under normal circumstances, the weight of the car presses down on the tire, flattening it against the road and providing lots of surface area to create grip. Since cupping wears away small divots in the tire's surface, a cupped tire's contact with the road is greatly reduced, increasing the likelihood of a skid or loss of control.
Cupped tires may be identified with visual inspection, but they may also cause an uneven ride and create noise at high speeds. The louder the noise, the more extreme the damage.