Optical cloaking technology has been discussed theoretically for a few years now and all sorts of weird science fiction stuff has been proposed, including optical wormholes, perfect optical illusions and space-time cloaks.
Perhaps even crazier is that a number of ideas have been achieved in practice. This short video, for example, demonstrates a macroscopic optical invisibility cloak.
To get yourself up to speed with current ideas in the field of optical invisibility check out this great article on the subject by Skulls In The Stars.
A ‘carpet cloak’ is an optical device that sits above a region of space and makes that region appear flat and empty, regardless of what lies underneath it. This picture below illustrates roughly how this works for rays of light: the rays get deflected while in the carpet but return to their original trajectory as if they had hit the flat surface unobstructed, or passed by it.