Sinon -a Greek spy posing as a deserter - tells the Trojans that the Wooden Horse is a magical object which will exert its power against Troy if left on the beach, but which can be turned to direct its black magic against Sparta and Mycenae (the two Greek cities behind the raid on Troy) if brought inside the city walls.
Like many ancient cities Troy had magical walls. When the horse is brought through the gates it chips the city wall with its head (it has been deliberately made tall enough to do so). This breaks the magical ring around the city, and Troy is ready to fall.
(But Aeneas will rescue the Palladium - the holy relic which contains Troy's 'soul' - and take it to Italy, where it will be reborn as a new Troy in the form of Rome).
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