Definition:
Cloaking is a technique used in Black Hat SEO used to send the content of a web page to a search engine in such a way that search engines are shown different content than that shown to a human search engine. The goal of this cover-up is to increase the search engine rank of a website with certain keywords.
In cloaking, the search engine and the user are not literally on the same page. Therefore, both the user and the search engine are being deceived.
How is cloaking done?
This is done by delivering content based on the IP addresses or HTTP header of the user requesting the page. When a user identifies themselves as a search engine spider, a server script provides a different version of the web page, which includes content that is not present on the visible page, or that is present but cannot be searched.
Is cloaking useful?
No. In fact, it is a practice in disuse and totally discouraged in the current SEO strategy.