Mods is short for "modifications" that change the game, more or less and are usually user-made. Stuff like Hackmons on Smogon. Also applies to consoles and general computing. Not exactly an expert, but that's the rough idea. Mods can also stand for moderators, a staff position that "moderates" (keep a watch on, answer questions and inflicts punishments when needed) the chat, forums and users.
SkarmKloud, examples of mods could be like adding Flare Blitz to Flareon's movepool, or changing a Pokemon's typing. Scizor work on that sarcasm a bit yeah? ;o