It is hard to write a simple definition of something as varied ashacking, but I think what these activities have in common isplayfulness, cleverness, and exploration. Thus, hacking meansexploring the limits of what is possible, in a spirit of playfulcleverness. Activities that display playful cleverness have "hackvalue".
Hackers typically had little respect for the silly rules thatadministrators like to impose, so they looked for ways around. Forinstance, when computers at MIT started to have "security" (that is,restrictions on what users could do), some hackers found clever waysto bypass the security, partly so they could use the computers freely,and partly just for the sake of cleverness (hacking does not need tobe useful). However, only some hackers did this--many were occupiedwith other kinds of cleverness, such as placing some amusing object ontop of MIT's great dome (**),finding a way to do a certain computation with only 5 instructionswhen the shortest known program required 6, writing a program to printnumbers in roman numerals, or writing a program to understandquestions in English.

Meanwhile, another group of hackers at MIT found a different solutionto the problem of computer security: they designed the Incompatible Timesharing System without security "features". In the hacker'sparadise, the glory days of the Artificial Intelligence Lab, there wasno security breaking, because there was no security to break. It wasthere, in that environment, that I learned to be a hacker, though Ihad shown the inclination previously. We had plenty of other domainsin which to be playfully clever, without building artificial securityobstacles which then had to be overcome.
Yet when I say I am a hacker, people often think I am making a naughtyadmission, presenting myself specifically as a security breaker. Howdid this confusion develop?
Around 1980, when the news media took notice of hackers, they fixatedon one narrow aspect of real hacking: the security breaking which somehackers occasionally did. They ignored all the rest of hacking, andtook the term to mean breaking security, no more and no less. The media have since spread that definition, disregarding our attempts tocorrect them. As a result, most people have a mistaken idea of whatwe hackers actually do and what we think.
You can help correct the misunderstanding simply by making adistinction between security breaking and hacking--by using the term"cracking" for security breaking. The people who do it are"crackers". Some of them may also be hackers, just as some of themmay be chess players or golfers; most of them are not.