Many machines (150K-180K) on the internet accept and route IP over IP by default.
IP-in-IP encapsulation is a tunneling protocol specified in RFC 2003 that allows for IP packets to be encapsulated inside another IP packets. This is very similar to IPSEC VPNs in tunnel mode, except in the case of IP-in-IP, the traffic is unencrypted. As specified, the protocol unwraps the inner IP packet and forwards this packet through IP routing tables, potentially providing unexpected access to network paths available to the vulnerable device. An IP-in-IP device is considered to be vulnerable if it accepts IP-in-IP packets from any source to any destination without explicit configuration between the specified source and destination IP addresses. This unexpected Data Processing Error (CWE-19) by a vulnerable device can be abused to perform reflective DDoS and in certain scenarios used to bypass network access control lists. Because the forwarded network packet may not be inspected or verified by vulnerable devices, there are possibly other unexpected behaviors that can be abused by an attacker on the target device or the target device’s network environment.
See full details here (“Description” copied here):
https://kb.cert.org/vuls/id/636397
An unauthenticated attacker can route network traffic through a vulnerable device, which may lead to reflective DDoS, information leak and bypass of network access controls.