Yes they are cheating. Stay away from pubs or you may very well cheat by accident if you enter into a grift opened by a cheater.
The question is, how do they cheat? Aren't new consoles save from hacks, and Battlenet?
Okay, I've studying the case and using Xbox Live features that show how many hours a user has played a game in particular, I found out that one of the players that have a level 10000 character had played Diablo 3 for about 580 hours.
Still, the most shocking reveal happened the other day with a friend who used a Monk and was totally unstoppable. He's been playing Diablo 3 for three weeks now, or so, and had recently reached level 70.
So he invited me to play and he was Paragon level 1780.
I said, ok, that's normal, maybe he played a lot. But no!!
During Rifts and Bounties, when he gained levels, I thought he would win a level in 1 increment. But again, no!! His character increased his Paragon level by 50 levels or so each time.
When I saw the animation of his character increasing his Paragon level, I remember him going from Paragon level 1780 to 1830, and my character didn't even increased her Paragon lvl (I am sitting at lvl 190 now)
In two hours or so he went from Paragon level 1780 to 2400.
(Xbox One version)
Dunno why, but my previous picture doesn't display, so I uploaded it to tynipic. It shows two Paragon level 10000 in the same game: