Those SEO techniques generally thought of as attempting to increase search rankings by deception are firmly in the black hat camp. Past methods could include hidden text which is intended to be read only by search engines, not people, thereby manipulating rankings by suggesting relevancy to keywords that don't exist for the reader. Text can be disguised by simply placing text off the readable page, colouring words so it blends in to the background colour or more deceptively by cloaking. Cloaking recognised the type of website visitor, either a search engine spider or a real person and directs them to different pages based on the same search result.
Google does penalise black hat seo techniques and one famous example is that of the corporate giant BMW who was caught in 2006 for cloaking and
removed from Google's index. Offending scripts were removed and BMW was reinstated just 3 days later. Would Google be so quick to act if a small business was involved?
Most of the techniques above are out of date and can be discovered by search engine algorithms or staff reviews. Black hat can also include illegal means of creating links, such as website hacking and script injection. Black hat generally only has short term gains - promote a website as quickly as possible then move on when it eventually gets penalised.
White hat techniques are those that concentrate more on the long term and will enhance a website according to a search engines recommendations and not by more shady methods. Of course Google's methods of website ranking are secret so SEO managers can only gauge what is important to Google by experience of what works and does not. It is therefore important for SEO's to keep abreast of the latest developments and continually test their methods. Today, white hat seo work generally covers keyword research, on-page optimisation and website structure - ensuring the current content is presented as best as possible so it can be picked up and indexed.
The third way is that grey hat is really where SEO operates and the line between black and white is so blurred it doesn't really exist. Everything that attempts to influence search engine results could be regarded as some degree of manipulation and therefore 'white hat' is a misnomer. Black hat techniques such as hidden text no longer work as they are easily detected.