“Counterfeiting” refers to a situation in flop games like hold’em and Omaha in which a community card actually makes a player’s hand less strong even after technically improving that hand. Counterfeiting occurs especially frequently in Omaha thanks to the added possible combinations of hands.
For example, say you hold and reach the turn with the board showing , giving you two pair (sixes and fives). Then the river brings the , which in truth improves your hand to a better two pair, jacks and sixes. The problem is, now any opponent holding an ace or jack now has you beat. A player with an ace has aces and jacks (a better two pair), and a player with a jack has trips.
Here’s another example: you have , and the board runs out . On the flop you had a pair of sevens, on the turn eights and sevens, and on the river aces and eights. But everyone else has at least aces and eights on the river, too — “counterfeiting” your hand — and your seven kicker likely doesn’t compare well to theirs.