Back link from a cloaked site using my domain name

What am I seeing and how does this work?

[skippy]

I have five links from a cloaked site and they are using my domain name minus the .com:

www.site_mydomain_url__mydomain.theirdomain.com/

I am curious about what is going on here. I did another search and found 1300 of these things for other sites. All with the same pattern. The person is using five main domains and varying the URL like above.

Does anyone know why they would use my domain name like this and how do they benefit from this.