To answer your question of "what is lime"...
Lime = kalkwasser = calcium hydroxide
If used per the link Roka posted, the only "side effect" is to kill off the aiptasia. Used properly, the paste will just coat the anemone and cause it to die. Now if you're messy when using it, and use it with your pumps on and water circulating, it could cause the death of other things.
The short story is that is causes an extremely local pH shift that breaks down the cells of the aiptasia.