The process of taking a single pure sound, audio sample, or number of layered sounds and creatively using a variety of analog and/or digital effects to manipulate the original sound into a completely different one.
One of the most common sound sculpting instruments are synthesizers.
The simple act of taking a drum recording, running it through a low or high pass filter, a pitch and time stretcher, and then some distortion, could also be known as sound sculpting.
Some people into circuit bending
will sample the sounds they record, and within a few hours of tweaking with effects, will /sound sculpt/ some lively ambient drones that are usually lowered in amplitude and placed behind recorded tracks to fill in some of the emptiness.
Nine Inch Nails, Skinny Puppy, and Crowesque are some good examples of bands who use sound sculpting to take common sounds heard around us each day and manipulate them into ambient textures, percussion sounds, or even lead synth noise.