Actually, Genetic Engineering is not a right terminology. Most probably, this name is given to the molecular genetics discipline by a scientist who always wanted to become an engineer. :-) So, now the question had become "What is Molecular Genetics?"

Molecular Genetics is a sub-discipline of biology that deals with genes in molecular level (not surprizing, hah?). In order to play with genes, first of all, you need to isolate them. After the isolation, you sequence them and then they are no longer mystery. You can alter them in any way you want by using certain techniques. After this, you need to put the modified gene back into the organism it is isolated (or into another organism, if you like!). Then, you can check how the alteration made on the gene sequence affects the organism in which the modified gene is inserted.