The area is presumably named Plaguewood because of the drastic effect that Blight has had on the landscape. The soil itself resembles a sponge in appearance, and the ecology of the area has been dramatically altered since the days of the plague. Fungus grows to amazing proportions, predominantly in the form of large mushrooms or toadstools, dwarfing nearby trees. It often belches out dark brown gas, looking in appearance similar to the gas that spews from Plague Cauldrons; whether or not these fungi are a tool used by the Scourge to spread clouds of noxious plague gas is not clear.
Plaguewood was the home to an imposing structure that opened a portal to Naxxramas, the enormous necropolis of Kel'Thuzad that floated above the Plaguewood. Access to this portal was controlled by the Argent Dawn. Only those who were exalted with the Argent Dawn could enter free of cost, while others had to pay a hefty fee. (The quest in question,  is still in game and completable, though now useless and unnecessary.) In recent times, Naxxramas has left the plaguelands after being called to Dragonblight after the release of patch 3.0.2. The teleport device to Naxxramas has since been replaced by a different structure.
Despite (or perhaps because of) the prevalence of the Scourge, representatives of the Scarlet Crusade routinely travel the road to and from Stratholme. Any undead that they approach, they attack — as they do anyone else, for that matter, being the fanatics that they are. All travelers should be on the lookout for them in addition to the Scourge.