No one likes a cheater. Unfortunately in the world of online game, cheaters seem to run rampant. For some reason these people get their jollies by pwning n00bs without even touching their controllers. These 1337 cheats also love to dishonestly earn the highest Gamerscores possible, and Microsoft is finally cracking down on them.
Sure, Microsoft could just ban the offenders from Xbox Live and be done with it, however, they're taking a much different approach. I believe the correct term would be “public humiliation.” Users caught cheating will not only have their Gamerscores reset, they will also be prevented from ever gaining lost achievements back and will be forever labeled as a dirty cheater.
Seriously, if you see someone with this wonderful tag, don't bother playing with them, but do be sure to make fun of them hardcore. Also posting their Gamertag on various sites for all to see would probably help too.