i don't think it's so much that you're monitored, but the way you're monitored.
The warden dumps all the DLL's using a ToolHelp API call. It reads information from every DLL loaded in the 'world of warcraft' executable process space. No big deal.
The warden then uses the GetWindowTextA function to read the window text in the titlebar of every window. These are windows that are not in the WoW process, but any program running on your computer. I watched the warden sniff down the email addresses of people I was communicating with on MSN, the URL of several websites that I had open at the time, and the names of all my running programs, including those that were minimized or in the toolbar. These strings can easily contain social security numbers or credit card numbers, for example, if I have Microsoft Excel or Quickbooks open w/ my personal finances at the time.
(this is copied straight from clicky one in Salibu Mally's post)