Ding is a common exclamation used by players to announce to their friends and guild members when they reach a new level. Because of this, ding has taken on several auxiliary meanings, such as the act of a player or pet leveling up, the graphic associated with leveling up, etc. Originally, the sound effect when a character leveled in Everquest was a ding.
The introduction of an achievement for reaching a level that is a multiple of 10 (as well as level 85 as of Cataclysm) has reduced the occurences of the exclamation. 'Ding' is still used when someone is excited about reaching a level that does not prompt an achievement announcement.
The appropriate response to 'ding' is grats.
Usage and Word Forms
Dinged - The past tense of ding I dinged 80 last week