In home computing, a hacker is a person who heavily modifies the software or hardware of their computer system. It includes building, rebuilding, modifying and creating software (software cracking, demo scene) and electronic hardware (hardware hacking, modding) either to make it better, faster, give added features or to make it do something it was never intended to do. Hobby hacking originated around the MITS Altair.
Hackers who have the ability to write circuit-level code, device drivers, firmware, low-level networking, (and even more impressively, using these techniques to make devices do things outside of their spec sheets), are typically in very high regard among hacker communities. This is primarily due to the difficulty and enormous complexity of this type of work, and the electrical engineering knowledge required to do so.