"cloaking" software is a special program that checks all inbound requests for pages and compares them to it's list. They are designed to find search engine crawlers, webbots, etc, and then generate a special page just for them.
It's a page that isn't very pretty or effective for normal people but it's been highly optimized for indexing. All the text are keyword laced, the title, the meta content, everything.
Incredibly good for boosting the heck out of your ranking, and chances are most highly competitive sites are starting to use them. As long as you don't try to use something like "xxx britney spears" as keywords on your PHP Tutorial website, you won't be banned.
So let that be a lesson to yah. If you say there are illegal naked pictures of celebrities on your site, there had darn well better be illegal naked pictures of celebrities on your site or you'll get in trouble.
Ironic, isn't it? 😉
Here's the only commercial cloaker I know of, but there are more:
http://www.ip-delivery.com/
It sounds incredibly cool, and it protects from things like Web Position Gold and other page-grabbers and it keeps your competition from studying your technique.
In the market I'll be entering (indie music, mp3, and CDs) high-ranking is hard to come by, especially considering the competitors are MP3, CDNow, and Amazon, so I expect to be using such software when the time comes.