An Exploding Box trap is one of the deadliest mid-level traps there is in the Wizardry game. After your party has finished an epic (to them) battle, the last thing they need is treasure that wants to blow them to bits.
If this trap is set off, it causes damage randomly to the entire party, much like a dungeon pit trap. Usually character classes that are less physical (e.g. mage) and characters with lower agility scores will be worse off, which means that this trap can really devestate a party where they might first encounter it around level 3 or 4 of the dungeon.
This trap can be found deeper in the dungeon as well, though at higher character levels, parties usually have enough hit points between them to survive and continue adventuring.