Ok, that sort of makes sense. The only problem I still have is how do people mod games on Xbox live then, or is that a completely different thing?
Not 100% sure but much like the Wii it requires some effort using a PC, L4D for example has some people streaming the 360 game through a PC where they use software to mod it, they eventually get banned as Live picks up on something being unsual as the software used to hack is not official so it's not digitally signed and the 360 security will let Live know that "Hey somethings feels strange here".
With the PS3 the main master key is now exposed an example of how bad this is for Sony is that someone could copy a game like Black Ops modify data on a PC maybe add some new guns here and there, sign it then save it on their PS3 and play the game on PSN with Sony unable to track them or someone could create custom maps/tracks/levels for any game and distribute them effectively nullifying DLC. Basically the PS3 is now open to full modding games, apps and all and Sony have little to no way of dealing apart from resetting and rewriting every PS3 out there which could brick a load of them.