Speaking for myself, it's when a gal's attitude changes from all lovey-dovey to being a bitch on wheels.

Mostly a real life experience but all too often happens in the hobby.

It's not a good kind of fucking.

In a generally BDSM context, to mind-fuck someone is to get them believing and emotionally responding to an extreme situation, often seemingly dangerous, when in fact you are keeping things safe.  For example one might feign leaving a fearful bound sub alone (making leaving sounds, opening and closing the door but secretly staying), or one might make a sub think s/he is to be branded (up to contact with ice instead of a hot iron), things like that.  It is not actually necessary that the mind-fuckee be bound.

So you are playing with someone, for pleasure, in highly intense and emotionally charged and intimate ways like fucking, but it's their mind that you stroke and penetrate.  

The wrenching relief of return to reality after such an experience is the real point, for me.  

The practice is not at all limited to BDSM, of course.  Creative vanilla couples do it too.  The field is vast.

Try it some time