Ok I understand this concept already, it is not a new thing but I had not heard of that term used before. I know it better as being "Server Authoritative" which is a netcode method used by id Software at least since Quake 3.
However, I do know that it is possible to "game" the authoritative model, at least in Quake 3. If you have enough time (experience) and know the game well enough you can actually get hits (hit targets/kills) at near 300 ping by shooting ahead... like "leading the receiver" meaning it is possible to shoot a wall on your screen, but the server registers a hit on a player, and the player dies on his screen, and on your screen you get a kill notification. This happens because by the time the server corrects for the lag issue, the player is in the place you had shot, even though this arrangement was not represented on either of the clients.
I am not certain how this "exploit" could be used in a fighting game.