A sandbagger is a player who intentionally deflates their rank. Their purpose is to beat an opponent who expects them to be weaker than they really are. "Sandbagger" and "hustler" mean essentially the same thing.
If a player's rank is below their playing strength, that does not necessarily mean that they are a sandbagger. For example, players who are improving rapidly are often stronger than their rank. They are "rising stars," not sandbaggers. Players who are recovering from a long losing streak may also be stronger than their rank.
If a player resigns or forfeits (by escaping) too many games when they are winning the game, they may be deranked. When a player is deranked, they are banned from playing rated games.
Sandbagging violates the TOS rule against "dishonest play". Players have been deranked and banned from KGS tournaments for sandbagging.