A reduce-only order can only shrink an existing position. If the position is already smaller than the order, the excess is cancelled rather than executed.
Without it, an ordinary order that outsizes the position opens a new one in the opposite direction. You intended to close and you are now short.
How it actually happens
Rarely by carelessness. Usually by a sequence: a position partially closes — a partial fill, a scale-out, a partial liquidation — while a stop for the original size is still resting. The stop fires at full size against a reduced position, closes what is left, and opens the remainder the other way.
The trader is now in a position they never chose, in a fast market, having just been stopped out. This is the compounding failure described in order types are not standardised, and it is why that article says to confirm reduce-only exists before automating anything.
Why crypto surfaces it more
Partial closes are more common here: thin books produce partial fills, and liquidation engines close positions incrementally rather than all at once. Both leave a resting order sized for a position that no longer exists.
And the market never closes, so the sequence can complete while nobody is watching — the exposure in sizing a position you cannot watch.
The related settings worth checking once
Whether stops trigger on last price or the mark, since that decides whether a wick takes you out. Whether the venue offers reduce-only at all. And whether closing an entire position is a distinct order type rather than a sized order that could overshoot.
Three questions, answered once per venue, that remove an entire class of accident.