It refers to when an LLM will in some way try to deceive or manipulate the user interacting with it.
I think this still gives the model too much credit by implying that there's any sort of intentionally behind this behavior.
There's not.
These models are trained on the output of real humans and real humans lie and deceive constantly. All that's happening is that the underlying mathematical model has encoded the statistical likelihood that someone will lie in a given situation. If that statistical likelihood is high enough, the model itself will lie when put in a similar situation.