Modding is a slang expression that is derived from the verb "modify". Modding refers to the act of modifying hardware, software, or virtually anything else, to perform a function not originally conceived or intended by the designer, or achieve a bespoke specification.
In other words, to change a character's appearance and/or improve the visuals or sound in some way. Skyrim and Half-Life are probably the most modded games and lately there have been hundreds of Resident Evil 1&2 mods, mainly for the heroine's appearance.
Most of the RE 2&3 modding videos are definitely NSFW, but this one shows quite tame mods in use and seems to have passed YouTube's nipple filter (which isn't very strict anyway, unlike Instagram).
In this one, Jill dresses for the occasion in a zombie apocalypse, as you do in such circumstances.
And here's a comparison of Skyrim original vs a mod.