Sometimes the dictionary definition isn't enough to understand the meaning of a word in a new context. "Hacker", up to about a decade ago, certainly meant "an expert at solving problems with a computer", but that meaning is not what people are referring to now. The dictionary hasn't caught up with modern parlance yet. Today's meaning is more along the lines of "A person whose expertise in a subject allows them to do things in new and innovative ways." To be described as a "<something> hacker" is a compliment.
I remember reading a definition for a hacker that was something along the lines of "someone who modifies something to do something that it was not originally intended to do".<p>It was better worded than that, and might not be entirely accurate, but I liked it.
Who cares? I think it's a matter of acceptance, people have come up with different meaning of words which get adopted around the world before the formally land into a widely accepted dictionary etc. Hacker before the culture started, meant a person who hacks (chops wood?), but now has different meaning.<p>We could create some 'xyz' word and if everyone starts using it, it becomes acceptable; that does not mean you flame early adopters, there are many words people would just throw around (such as fck :P), I guess they use they creative/poetic license and get away :P
Hacking means "playful cleverness". A hacker is a person who employs playful cleverness in things he/she does. He/she may or may not be a programmer.
People do that because the word "hacker" denotes status among geeks. There's also no solid criteria for it, so anybody can call themselves a hacker and immediately raise their social profile without worrying about being called out.