When you first make contact with a radar-equipped air traffic control unit, and sometimes when you fly into the airspace of different one, they assign you a transponder code. The code is a four digit number that you set on an electronic box, such that when ATC radar hits your transponder antenna, the transponder answers back with the assigned code, plus your pressure altitude.
ATC terminology for "set a code of" is "squawk". So they say "squawk one three four two." If they are really formal they may say "squawk a discrete code of ..." The numbers on the box go from zero to seven for each place, meaning that there are 4096 possible different codes.
If you forget to set the code, or if you set the wrong code, or if you set the right code, but the box malfunctions and transmits the wrong code, then ATC sees someone else's data on the screen next to your blip, so they think you are someone else, and confusion can result.
Pilots are confused enough to begin with, and there is lots of scope for messing up, especially as ATC tends to reel off multiple numbers together. Things I have personally seen pilots dial into their transponder instead of the assigned code include: the time in zulu, the assigned altitude, and the altimeter setting.
I'm always deathly afraid of switching the altimeter setting and the transponder code in some situation where it matters. They are both four digit numbers. What if the controller said "altimeter setting three zero one four, squawk three zero five six" and I dialed in the wrong one, setting my altimeter 520 feet high, causing me to descend into your house? The other day I reached for the OBS, put my hand on a knob and gave it a big twirl. Unfortunately it was the altimeter, not the VOR that I had found. Oops. I was descending in IMC. Scramble scramble to find and reset the correct altimeter setting in time to level off.
By the way, It hasn't been my New Year's resolution to blog every day. I just like blogging. I should really have a resolution to not blog every day. I'm going to cool off and not blog every day for a bit. In the meantime, I'll be working on interview strategies. More on that later.