Social Engineering is a term that basically means "talking someone into something." It's not hacking or cheating, though it's often used in conjunction with such activities. Successful confidence men and used car salesmen are consummate social engineers. So are successful cheaters in online games, since the trick of succeeding at that venture isn't to find the hacks, it's to get other people to let you use them. Or to try to use them themselves, thus falling victim to a key logger or item dropper or other such malicious program.
There are countless social engineering scams, most of them Battle.net adaptions of classic "grifts."
One example
A very common type of social engineering is a two man confidence game. Two players join a game, and act like strangers. One player claims to have an amazing ability; a way to dupe items, or hack them to increase their stats, or something else desirable. Naturally no one in the game believes him, and the wiser players simply squelch him. His (secret) partner is the most vocal in his disbelief, they appear to argue, and finally the skeptic throws up an item to be duped or otherwise manipulated, "Just to shut him up."
Imagine the skeptic's surprise when he receives back two of the items, or the item much improved, etc. He exclaims in amazement, then quickly offers up more items to under go this transformation, loudly singing their praises to everyone in the game. If anyone else there is gullible enough to fall for this act, they'll offer up their own item(s) to be improved or duped... at which point both players vanish from the game, taking the spoils with them.
Alternatively, and more dangerously, the original huckster isn't offering a simple item upgrade, but is claiming that he's got access to a program that will do amazing things. The second player is skeptical, but after a delay to apparently install it, he claims it works wonderfully. This is obviously meant to get other players to download it, and give themselves a virus, or a backdoor key logger, etc.
Never assume other players aren't secretly working together, and never believe anything that seems too good to be true.