Caller ID Spoofing is when the Caller ID you see on an incoming call is not actually the phone number or company name associated with the caller's telephone.
There are a lot of legitimate reasons caller ID's are spoofed, for example a large company may have thousands of phones each with a different phone number, many companies choose to only display the company’s main number as the caller ID. One reason for doing this is if a person hits redial, they will be connected to the main number of the company and not the phone of the person who actually called them.
Of course, there are a lot nefarious reasons for "Spoofing" one's Caller ID. Telemarketers in far away lands may want to appear as though they are calling from your area code or a scam artist is trying to convince you that he is from your bank and needs information about your account. You might believe this person if the Caller ID said the name of your bank in your area code.
This is what Congress is trying to prevent with the passage of the Truth in Caller ID Act of 2010.