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I was going through some threads in a forum and came across Cloaking, and it seems many people are confused with this term being used in SEO. 

Cloaking in SEO (Search Engine Optimization) means presenting your website differently to different users, especially to Search Engine Crawlers. So, what happens is that you are showing different content to Search Engine Crawlers and different to the browser of a user.

This is usually done by delivering content based on the IP addresses or the User-Agent HTTP header of the user requesting the page. When a user is identified as a search engine crawler, a server-side script delivers a different version of the webpage, one that contains content not present on the visible page, or that is present but not searchable. 

Usually, this method is used in BlackHatSEO, where the admin wants to get their websites indexed by search engines even while having content that would not have got indexed in the first place, maybe because of policies or maybe because the content is NSFW.

However, it can also be a functional (though antiquated) technique for informing search engines of content they would not otherwise be able to locate because it is embedded in non-textual containers, such as video or certain Adobe Flash components. Since 2006, better methods of accessibility, including progressive enhancement have been available, so cloaking is no longer necessary for regular SEO.

Cloaking is often used as a spamdexing technique to attempt to sway search engines into giving the site a higher ranking. By the same method, it can also be used to trick search engine users into visiting a website that is substantially different from the search engine description, including delivering NSFW content cloaked within SFW search results.

For example, a cloaking technique may be used to showcase a website as a celebrity fanbase website while when you click on it, it will be actually a porn website.

Cloaking is a form of the doorway page technique.

Can we get penalized by Google for cloaking inadvertently as well?
Usually, it never happens that Google will penalize you, because cloaking is not something that you do inadvertently. 

There should be a clear intention to what you are doing in this case and hence you are aware if you have a risk of getting penalized or not.

One of the areas where you might get risked is when you add links to your websites and then run advertisements with Google Adwords. In that case, it is observed that if your links are redirecting to WhatsApp or some other website that seems to be suspicious, in that case, Google might ban or suspend your account.

Something like this happened to one of the accounts that my friend was running, where he had linked a WhatsApp group and links to the Payment Gateway, and because he was still new in website development, therefore he had added links in a way that looked suspicious to a search engine crawler.

In that case, his account was suspended and it was assumed that the person is using cloaking.

But if you have good insights about how to add links and how to not, in that case, it is unlikely that any search engine will penalize you.

One thing to take care is that never host your products and services on other website development platforms if you are planning to advertise your products using Google Adwords, because what happens is that you use your own website as a brand or landing page, but you target your traffic to the website development platform because there you have whole product market and all the functionalities that are required for customers to add products into cart and do the payments.

In that case Google might assume that you are using cloaking to redirect people to a different page altogether and you are showing a fake or stand up page to the search engine crawlers.

So, try to host both the products and your content on the same URL even if you are buying the platform from software companies like shopify or some other no code development platform.