Hacking refers to finding security vulnerabilities in a system to gain unauthorized access. There are three main types of hackers: black hat hackers engage in illegal activities to harm systems; white hat hackers conduct ethical hacking to find vulnerabilities and help organizations; gray hat hackers sometimes violate laws but are mostly ethical and tend to show off their skills. Exploitation involves using tools like SQLMap, aircrack-ng, and Metasploit Framework to take advantage of security flaws by delivering malware payloads. The document then discusses building an Android payload using AhMyth and controlling a victim system through reverse TCP connection.