What is usually meant when Python is mentioned in the context of game scripting is that it's relatively easy for a game's developers to embed a Python interpreter into the game. Python would then be used to control higher-level gameplay elements like artificial intelligence while the game's native language (probably C) handles the heavy lifting (e.g. rendering, collision detection, etc).
This does /not/ mean that you will be able to use Python to modify your favorite game, unless it happens to already have an interpreter built-in. Maybe some resident gamers here can list some games that use Python for user-accessible scripting; I don't know of any. -- http://mail.python.org/mailman/listinfo/python-list
