It means that the ship that's taking damage passes on 30% of that damage to the ships around it. So if a Maliced ship gets hit for 100,  it will take the 100 damage and ships around it will take 30. It works well with Vengeance because Vengeance returns a multiplier of the damage, so the ship will be damaging itself and others around it.

The full chain usually goes Animosity on the Radiance to force the enemy to attack it, Vengeance on the Radiance to return the damage, and Malice on the enemy ships to spread the damage around.

Just make sure the CB target is something that can take the 2000 dmg that CB alone does over its duration. Doing it on a frigate is mostly a waste as you won't get the full damage (CB does 250 damage per second over 8 seconds).