Simply put, ethanol is an excellent SOLVENT (dissolves plastic, rubber, fiberglass and more), CLEANSER, DRYING AGENT and unlike MTBE ethanol will ABSORB WATER, which can cause serious problems to some engines.
Example(s): Ethanol will dissolve resins that create a black sludge that coats and travels through the engine, causing engine stalling and complications, including clogged fuel filters, carburetor jets and injectors. Ethanol burns at higher temp causing damage to pistons. Ethanol dries out and disintegrates many rubber and plastic parts and hoses in engine. Ethanol will release rust, debris, sediment (just about anything that has accumulated in engine) and release this gunk - clogging and damaging many engine components and filters.