The simple answer is that the stock products put out by company's like Tascam, Marantz, etc. often aren't optimized for the type of recording you might do. Alot of us record music, so we'd like the electronics in our recorders to sound 'musical' (warm mods, concert mods, presence mods, transparent mods, etc.). Others might record nature sounds, so they might like their preamp to be the quietest thing possible and have the absolute minimum noise floor. So, these 'mods' or modifications customize the products for the specific recording environment that you expect to use the product in.
Doug Oade of Oade Brothers and Chris Johnson of Busman Audio are two of the better known people here at taperssection.com that do custom 'mod' work.