How can alcohol cause blindness?
Methanol is rapidly absorbed not only after oral ingestion but by inhalation or after cutaneous exposure and becomes oxidised in the liver to formaldehyde and to formic acid, metabolites which are more toxic than methanol itself and which inhibit mitochondrial ATP production. 
  
  Histopathologically, circumscribed myelin damage behind the lamina cribrosa of the optic nerve has been reported. The electrophysiological changes following acute methanol ingestion suggest that methanol affects photoreceptors, Muller cells, and the retrolaminar portion of the optic nerve.


Source : http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1771266/

Several years ago there were numerous cases of blindness and death due to Methanol in Estonia.  

If you ask : What exactly happened?

Waste from wood (sawdust, shavings), and other cellulose-containing materials (paper, rags, etc.) can be processed by applying excessive heat and acids, resulting in degraded cellulose into sugar (glucose). Sugar obtained is fermented to get ethanol. However as a side-effect, some methanol is produced as well. This compound is not safe to drink. Basically, someone sold it (illegally) as an ethanol drink (I am not sure if they stole it and tried to monetize it this way.).

There was a (stupid) joke that somewhat popularized knowing about this problem: 


  (roughly translates to) "Guys, let's drink faster, it is getting dark."


Other impurities in the alcohol could have similar effect, but I can confirm at least the methanol part.