Ok... im trying not to laugh... It is when you modify your case, usually appearance wise. Like case windows, lights, etc. Also add useful things like a fanbus or rounded cables. Check out my site on case modding for pics and info.
the idea behind case modding is that no one likes beige the standard computer colour and u spend alot of cash on the inside of your comp and then hide it behind a beige cover. case modding shows off all your hardware eg. window kits and lights