The precise definition is of some debate, but the usual understanding is that it relates to a TO taking an action that is legal but perceived underhanded or somehow unfair resulting in that TOC’s ORCATS allocation (the proportion of ticket sales paid out to a TOC) increasing, without that TOC carrying any additional passengers or doing anything to justify the payment.
I suppose an example would be on the ECML. (This action was taken some time ago by a previous operator of the line but I use current franchisee names strictly for ease of recognition and current fares for ease of reference.) An anytime first class single from London Terminals to Edinburgh is £241. Almost any passenger using this fare will travel directly from Kings Cross on VTEC. Under ORCATS, part of this fare could be assigned to the other TOCs the passenger might theoretically have used, such as GN, EMT, Thameslink, VTWC, Northern, FHT, FTPE, CrossCountry, GC, ASR, SCS, LM, or Chiltern. VTEC introduced an alternative fare at £237 with route VTEC ONLY – which it is precluded from doing for standard class fares – and as that fare can only be used on VTEC, it gets every last penny. Passengers buying FOSs will save a trivial amount and the rest just handles itself.