Sometimes in single player games it refers to a player strategically playing with the sole intent of gaining experience points as quickly as they can. This defintion can also be used in multiplayer games, but it is typically displaced by a much more charged meaning.
Powerleveling is most frequently used in multiplayer games, where it usually refers to a player that is of much greater power assisting a player of much lower power in defeating monsters that are far too powerful for the low level player, but are easily and quickly killed by the more powerful player. Defeating high level challenges rewards the lower level player with experience points more rapidly than normal. In general this is considered a form of cheating, or manipulation of the game system for unintended results.
To combat powerleveling, game designers have devised better means of rewarding a player based on their actual contribution to the completion of the task. Another method used is to cap how much experience a character can gain at any single moment. For example, the game might not allow a character to gain more than 20% of the experience they need to level up by defeating a monster. This is controversial in that it also punishes players who are skilled enough to face challenges more difficult than regular players or that band together with other players to face more difficult challenges.