Cloaking is a technique by which a website serves different content to users based on their IP addresses. This is done by delivering content based on the IP addresses or the User-Agent HTTP header of the user requesting the page. Cloaking has been debated quite numerous times, as to whether it can be seen as a black hat or a white hat seo technique.

Let's try to see it from both sides:

Scenario A where Cloaking can be seen as a white hat technique:
A website needs to present their content based on the nationality or language of the user, which the site determines based on the IP address from where the request reaches the web server. There are certain websites which wish to show different type of content to its readers (especially online news papers).

Eg: Google search engines offers localized versions of its search engine showing up based on which country the user try to access it from, even if he tries opening google.com website.

Scenario B where Cloaking can be seen as a black hat technique.

When a user is identified as a search engine spider, a server-side script delivers a different version of the web page, one that contains content not present on the visible page. The purpose of cloaking is to deceive search engines so they display the webpage when it would not otherwise be displayed.

Assume that my search in Google for "Honda Civic" returned a listing of a page that looked like it had all the information I was looking for and upon reaching the website I realize that they actually sell pornography.
For a webpage without natural popularity in the search engines, webmasters may be tempted to design pages solely for the search engines. Its certainly cloaking as how search engines see it, no matter how pure your intentions where while you designed your website. Search engines have to always stand by the user's side and safeguard their best interest in finding out a website that could provide them with relevant, useful information or service.