The above terms do not describe the latest fashion hype, but rather originate from the way computer hackers are being classified.
While hacking itself isn't necessarily bad (most hackers are outrageously smart and hands down the most talented programmers out there), it's how and where which techniques are being applied and for what purpose that makes them bad
Industry rumor has it that the biggest players in the technology field employ hackers for the sole purpose of making their networks, their applications and their IT environments safe and intrusion-proof. We will neither confirm nor deny this, since in our case it has no bearing.
The difference between White Hats and Black Hats is that Black Hats use their knowledge to commit malicious acts (manipulate, destroy or unlawfully gain access to and acquire data), whereas White Hats use their skills for ethical purposes (e.g. to uncover security holes).
In Search Engine Optimization this means the following:
Black hats use illegal or disapproved methods (as defined by Search Engines) to promote websites. While the results are mostly short-lived and usually carry severe punishments from the Search Engines, nothing will limit their perseverance, curb their creativity or eradicate their existence.
Some say White Hat SEOs are less technically versed than Black Hat SEOs. This is absolutely untrue. Just because we choose not to apply those techniques, doesn't mean we don't know how to do it.
In the end, it always pays to pursue ethical SEO since most Black Hat techniques — while they might provide short-term success — will inevitably result in punishment and potential permanent removal of your site from the Search Engine's index.