Sandbagging means using small accounts to lower the team's average level. In the beggining of WW, you could see an alliance using 55% of its players being maxed out players, with 45% iron age level 9-10 players who weren't attacking, called sandbags. (WW matchmaking is according to the avrage of all players' levels)
Since then, the term has been misused so much that a concensus on a real definition is impossible to achieve. To some, using Enlightment players, even if they participate, along with Cold War players, is called sandbagging. Really, any mixed level alliance can be considered sandbaggers.
BHG has done a good job eliminating the first version of the 55/45 sandbagging. You could still do it, but it makes for very boring wars. Today many alliances do it for various reasons, on purpose, or just because that's the players they have.
In the end, sandbagging, where you would add non-participating iron age level dummy accounts, can be done by any alliance. Some choose not to do it, some do, some adapt, some never will...