Hacking refers to the ability of a watch to stop when the crown is pulled. Originally used to synchronize watches in warfare, hacking may be implemented by
- Stop-seconds, where the movement is stopped by the crown. In quartz watches, it might actually disconnect the battery, which is why there may be a little plastic washer on the crown of your new quartz watch: it's keeping the battery fresh until you depress the crown and start it running.
- Zero-reset. Much more rare, this moves the second hand to 0/60 when the crown is pulled. Clever, useful and more expensive.
If a watch is non-hacking, it's hard to set accurately, since you can't synchronize the seconds. Kind of annoying, actually. Mainly seen in lower-end Japanese automatics (Seiko 7S26, various Orients, Miyota 8215, etc) and older designs such as the ETA 6498.
You can sometimes hack a non-hacking movement by putting the crown in the setting position (all the way out) and lightly applying back pressure, i.e. rotate it slightly in the reverse direction. This works on the 7S26 and some 82xx series movements for me, but doesn't seem to work on the 6498.