Brand squatting involves purposely naming your app in order to be confused with another more popular app, thereby leveraging someone else's app or web brand to more downloads.
In its worst form you publish a very crappy app and title your app to match searches for popular apps and confuse users into downloading your app instead. Although it's often used in a clearly "black hat" manner, you will find lots and lots of gray hat uses in the store - where legitimate (non 'scam') apps include keywords popularized by their competitors.
I just did a search for "temple run" - a hugely popular runner game, and came upon this awesome example of branding squatting:
Haha! I can see at least 3 other top game they're brand squatting on. I may do a case study on this app because it's such a great example of so many hacks: brand squatting, brandwords, astroturfing, and more.
The results of the astroturfing are very evident. Despite 172 1 or 2 star ratings out of 624, these guys have managed to keep a 3.5 star rating through astroturfing and aggressive in-game rating prompts.