From what I know they began as treaties to allow for the importation of European manufactured goods, and were eventually the recognition of a de facto European economic supremacy. They were made when the Ottomans were still very powerful militarily, and only meant for commerce, but once Ottoman power declined they became the foothold for political dominance by the European powers. In terms of undermining the Empire, the Capitulations integrated it into the European-dominated world economy, making Ottoman lands a source for raw materials and destination for manufactured goods, while politically the subjects under protection according to the Capitulations had more and more leverage and could abuse this privilege to their and their government's advantage.