My hair dresser is friends with a really famous celebrity who is like 50. The guy is totally out of shape, and yet recently he was in some advertisement or something with his shirt off and in the ad his body looks almost like Brad Pitt's or something.

My hair dresser says it was all done in Photoshop. He says it wasn't a body double or anything, it was just retouching.

Anyone know anything about how to "etch" in abs, create muscle definition, etc to make people's bodies look much more fit than they really are?

You need to be good at "normal" painting to do this, and have a good understanding of light, to make it convincing. Easier then to insert some other persons abs or at least use it as a guide to paint or Dodge and Burn the abs.

I've done a decent amount of retouching for fitness model types. It's much easier to enhance already existing muscles but it's not so much a stretch to paint in some definition with dodge & burn. It regularly done with makeup for stage work. A little highlight here, a little shadow there and voila!

You need to understand muscle structure in the first place but using another picture as a guide is easy enough.