It refers to an attack where the attacker listen communication between the two ends without taking consent from either of the ends or without acknowledging them. The attacker can do wiretapping in order to track the conversation between the two ends or can launch attacks like MITM attack to do the same.

This term is always confused with Encrypting. When we talk about encoding, it refers to changing a particular writing format to another so that it can be understood by systems and it gets publicly accessible. For example, all URLs are UTF encoded before they are transferred across the internet because most of the systems can understand it.

Any program that is designed to break the vulnerabilities in a system is regarded as an Exploit. Just like an explosive, an exploit can even destroy the system and corrupt files.