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Visa calls it the Falcon system. Mastercard has something similar.
It's a fraud detection system that monitors accounts for suspicious transactions. Transactions that have a higher rate of fraud/chargebacks then regular transactions.
These include merchants in the 5967 category code (which includes, but isn't limited to) third party processors.
They also monitor automated systems (payphones, automated gas pumps, movie theatre ticket dispensers, etc). Usually, a card thief will test the card in these systems to see if it's still valid.
Electronics stores are also monitored. So are liquor stores.
Transactions done abroad are also monitored.
Things like large/multiple declines are also monitored (for example, you only have $200 available but transactions are attempted for $2k, $3k or the same transaction is repeated multiple times).
If you're in a store and it happens, the card isn't declined, it's reffered. The merchant's terminal says "Call issuing bank". A quick call to your bank to say it's you and they'll put it through.
The system detects based on your account history. If internet charges are rare, an paysite membership may be "falconed". If you've never gone out of town and all of a sudden, hundreds of dollars are spent across the world, you might be falconed. If you only do small transactions and then you attempt a transaction for a large sum, you might be falconed.
In all cases, a simple call to your bank "unblocks" your card. At many banks, they can set up your account to bypass this system temporarily or permanently. For example, if you're going to Europe for 2 weeks, let your bank know. Or if you're putting a large charge on, let them know. Or like jimmyf did, they can bypass it completely. Only problem is it leaves you open to fraud, and they might hold you liable if they can prove the system could have prevented it.
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