Cybersquatting is the process of buying a domain name with malicious intent. Suppose you are forming a new company called xyz. You go to a domain registrar and type xyz.com and you find that the domain is not available and you have to purchase it for higher price.

This however always doesn't mean that it has some wrong doings.
It could be that the current domain owner actually wants that domain name for future use.

If it is found that the domain owner has no relation with the domain name and has no plans to develop any kind of product based on that name or is using it just to sells ads, it's punishable.

To find out who has purchased a domain go to https://www.whois.net/