Moldy Cheese gives a +40% chance to apply a single Poison stack on hit.
This deals damage every 0.5 seconds for 5 seconds (when your duration multiplier is 1.0x), If your duration as was 2.0x it would be damage every 0.5 seconds for 10 seconds.
This means that with a 1.0x duration, a single proc of poison will deal damage 10 times over the course of 5 seconds.
If you keep hitting an enemy, you can keep adding more poison stacks, which ups the amount of damage it does. The damage formula is:
$$\text{Damage Every 0.5s} = \imagetooltip{Damage Multiplier}{https://res.cloudinary.com/dft1n3spr/image/upload/v1764501733/megabonk-guide/msyfbhopicnivvxuy6tk.png} \times \text{poison stacks}$$
When you apply a new poison stack, it refreshes the 5 second timer.