SP dropping is short for Squad Power. It's where a player intentionally lowers their hangar/squad power but leaves in an OP mech. They do this to get matched up against low level players and use that OP mech to run over everyone. It's been going on for years and it is definitely a bad thing. See screenshots below from the last 5x5 tourney. This is the cheater who won my bracket on Saturday.
Most people consider it a form of cheating, but Plarium refuses to take any action to correct the problem. Meanwhile, SP droppers who would normally run an 18k+ hangar are running 1100 hangars so they can rake in 1000+ points per round in 5v5 tournaments and steal all the rewards.
We've been promised a resolution so many times and for so long, I can't keep up.