Inventory duping, not editing.
I think its done rather cleverly, where you send that your mining a block, the server tells you when its destroyed, then tells you that there is a block on the floor. You send that you move to the server, and when the server says your next to the block it removes the block from the floor and add its to your server sided inventory. So no game there.
Want my advice? Setup an auto-miner using autohotkey. It would be easy enough to make a loop go on and off when you press your middle mouse button, make it repeatedly mine and move up / down each time you have finished a block (Set wait time, find the block mine-time from the minecraft forums/wiki)
I currently just have it repeating sending that I have my left mouse button down, but put time into and time the script right and you could have a working auto miner.