How do people "hack" online games?

I really don't see how it's possible for someone to go in and "hack" a game that someone else coded and is closed-source so this guy can't even see how this person coded the game - and, still somehow manage to make themselves invincible or able to see through walls, etc. I haven't played any online fps games in a while but I just tried out Combat Arms and they had some prick who was straight up knifing me from literally out of no where!
I don't know what this guy does for a living or if he's a student, but I just graduated from college for computer science and I still don't see how these people manage to do it. It's so annoying!
 
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