Because the system thinks you CAN'T do lower case, so it's trying to give you a way to still use upper and lower case byt automatically translating for you. Things that should be upper case get a "\" in front of every upper case \L\E\T\T\E\R. That mode was designed for very old, upper-case only terminals, and really isn't useful today; in fact it will cause many programs to act strangely or not to work at all.
If that's something you do accidentally and it screws up your application, you can add these lines to the end of /etc/profile:
stty -iuclc -xcase -olcuc
Those lines will reset you to "normal" if you logged in with upper case.
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What happens then? Is there a ticker tape parade and heartfelt thanks from the computer it has reached? No, my friends, there is not. The poor packet is immediately gutted, stripped of its protective layers and tossed into the hungry maw of whatever application (mail, a webserver, whatever) it belongs to. (Tony Lawrence)