Look I don't do any of this so I'm going to try and explain what I can until someone with actual knowledge shows up.
Basically when you are in a game of league your computer is constantly sending and receiving information (packets) to and from the server. These have everything in them, the position of champions, minions, monsters, what level the enemy is etc.
Practice mode gives you the ability to mess with any of these inputs by giving gold, levels, reseting cds however your computer will be doing it all client side. If there were 2 people then you would also have to send all of those changes to the other computer.
If you then monitor the what packets are being sent between the server and the 2 other computers then you should be able to reverse engineer the proccess.
If you know what information to send to the server to tell it what to change to instantly give yourself 10000 gold or level 18 then you can start doing this in normal online games thus undermining the entire game and potentially allowing people to cheat.
Idk though, I might be completely wrong but that's what I've kinda heard/read over the years back when they didn't want to make a sandbox mode entirely.