As the word "modding" suggests, the hardware modding process is a process of transforming and altering a piece of hardware (be it pc parts, laptops, cars, home equipment, etc.), most of the times with the purpose of making it better or just better looking, but sometimes only for the fun of it. The expression "modding" is a slang coming from the verb "modify".
Most of the people use modding when they refer to the overclocking of computers in order to increase the frequency at the which the CPU operates. Case modding is also a popular activity amongst many computer geeks. It includes the customization of a computer chassis or the installation of water cooling technology.
When speaking of the cars and bikes business, modding often refers to engine or outer looks tuning, remapping of a vehicle's engine control unit or customization of the bodywork.