andersja’s blog provides a definition of cloaking:

a server-side hack that allows the webserver to serve different content to search engine spiders and visitors; for example while the visitor sees a whiz-bang flash animation, a search engine may see a plain vanilla HTML chucked full of crosslinks, keywords, meta- and header-tags — just the way they (the search engines) like it.

He points out that this approach is somewhat risky in that you might get yourself kicked out of the search engine if they discover you are trying to game it with content other than what you show to your human readers.

The other thing: how frustrating for a site to have very usable and accessible content but they only make it available to bots!