Possessed humans (also called Infected Humans in the English dub) were the result of Suzaku using the Makai Flute to control the Makai insects and using them to possess humans in order to create a drone army for his own personal use.
While Yusuke and company were busy with the Saint Beasts, back in Human World, Botan and Keiko had to contend with numerous Possessed Humans. Having no will but their master's, the Possessed attacked Botan and Keiko, although Botan was able to formulate a Bug spray to kill the cause of the Possessed Humans, the Makai insect.They and the rest of the world weren't safe until the Saint Beasts were defeated and the Makai Flute was taken back from Suzaku.
Initially Gouki believed the Kurama was a possessed human as well (though by a demon, not the Makai insects), but Kurama explained that his situaion was a fusion, as he was too weak to carry out a possession.
Possessed Humans resembled living zombies. Their skin turned blue and their intellects receded,their personalities now dominated by the will of their master.Because of their master's orders, they were openly hostile to non Possessed Humans and posed a serious threat to Botan, Keiko, and the entire world.