I've assumed it means cases like you were faced with some bureaucratic wall that was an impediment to getting things done, and you figured a way around them. It doesn't necessarily imply unethical behavior, though I'm sure if the example someone gave was of illegal or unethical behavior that would be important information for the questioner to consider. Sometimes this sort of practice is called social engineering, knowing how to work the system, or being street smart. It could even refer to starting a grass roots campaign to get a bad law changed. To succeed in business you need to be able to solve difficult non-technical problems as well as technical. Rather than based on logic, the answer may be based on insights into human behavior, loopholes, or just understanding practical matters of dealing with red tape. This question gives the person an opportunity to discuss cases where they did so successfully.

It's possible that it's there for precisely this reason. I've also filled out a few mock applications and get stumped on this one too.

Exactly

If you can't fill the application form, you're already out

I guess it makes sense, if you can hack (in the traditional meaning of the word) something outside of 'tech' this shows that you understand something about entrepreneurs sometimes having to play with the rules or thinking outside of the box (which does not mean doing something illegal)