Just curious how that cloaking technique is used in seo?

Easy, you build a "crap site", rank it, show the ranked site to search engine bots and different site for "real visitors".

Another option is to build a real site for visitors but with cloakers you can hide/show different things for crawlers (like hiding affiliate links, hiding some text, hiding or adding images...)

Cheers
 
You build a highly seo optimized text heavy page just for the search engines to see. When a human visitor visits the page they are displayed a landing page that has a sales pitch on it. When a search engine spider visitsit will be detected and shown the cloaked page. Most times sales pitches are hard to optimize for seo so cloaking is one way around it. But its a game that you have to stay on top of because you will get domains banned once you get caught. The idea is to make new domains get them ranked and make some bank faster than you lose them to bans.
 
Cloaking is explicitly against the Google guidelines

It can get you removed from the Google index.
I recommend the video by Google employee Matt Cutts who provides a simple, easy to grasp definition of cloaking.

Wow, seems like you`re on a wrong forum buddy. If you read Google guidelines then link building is against it too.

Cheers
 
These days cloaking is more prevalent in paid search, in my experience. Basic idea is the same, you show bots/reviewers one page, and visitors another, which is usually against TOS in some way.
 
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