URL cloaking means showing different URLs to the user and search engine to improve the ranking position on search engines. Its obviously black-hat techniques causes for penalization.

URL cloaking is different from content cloaking. Of course, content cloaking is a black-hat SEO technique that is used to trick search engines by showing two different contents. The content that is shown to human visitors is an actual site while the content that search engine sees is completely different. The site that search engines see is full of spam, mostly keyword stuffing.