The afflicted are victims of the Sanguinesti Affliction, a disease that infected Mort'ton in early Fifth Age. The disease itself spread to the village from the neighboring Sanguinesti region, although it is unclear how. The afflicted have a very limited mental capacity, and are highly aggressive to non-infected individuals. They speak nonsense if approached and have a sickly green colour, as well as a disoriented way of walking.
The Afflicted may be cured temporarily by either of the two serums, Serum 207 or Serum 208. After curing the afflicted, the cured villager(s) will give rewards of various types, many related to making the cures. The Serum 208 yields better rewards from villagers.
If you use either serum with them, their clothes change to a more normal colour and the rips in the clothes are repaired. When a potion runs out, the rips come back.
If you use either serum on them while they are attacking you, they will stop attacking after they have been cured.
Serum 208 is supposed to be a permanent cure for the Sanguinesti Affliction. However, if used on an Afflicted, it only cures them temporarily. This is likely an abstraction, simulating that there's no end to those in need of the cure. It was probably done to avoid making the serum useless when all the afflicted were cured.