The vinyl jacket covering the wires shrinks lengthwise over time and pulls away from the magsafe connector. The strain relief is so short that the wires then bear all the stress and eventually break from bending fatigue and then overheat when sparks jump the broken wire. This has happened to me twice over four and half years already and each time a white wispy smoke appeared with a burnt smell and I was lucky enough to catch it each time. Each time I called Applecare and they referred me to a dedicated department that asked me very specific questions about if any other damage occurred. After making it clear that none had, they sent me a new identical replacement for free. The last one has only lasted 4 months which leads me to believe that the shrinkage is related to the age of the plastic among other possible causes. The bottom line is that they have known about this problem for a long time and have made a calculated decision to use up their inventory of spare cables instead of sending out plugs that have a more positive connection between the wire jacket and the magsafe plug.
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