Here's a link to another thread about cutting:
http://allnurses.com/forums/showthread.php?t=51911
I think z's playa gives a good general explanation, but from what I've read and witnessed, I believe it is more complex than that. Some kids do it out of rebellion and some think it is a "goth" kind of thing to do--especially if they have witnesses and can gross people out (not that there aren't "goth" kids who do this because they are in a lot of pain). But not all people who cut want attention. Many do it because they can't cope with their inner pain any other way and the physical pain is more bearable than the emotional pain. Cutting should always be taken very seriously until a good evaluation is made.
There are often other problem behaviors that occur along with cutting, such as shoplifting, sexual promiscuity, and drug abuse. Not all kids who cut do all or even any of these things, but it is something to be aware of.
Your friend is making a good start with re-evaluating his or her parenting style. I hope they have made an appointment with a good adolescent psychiatrist and/or therapist. This isn't something that can be resolved alone. Most people who cut eventually quit--those that don't accidentally kill themselves--but if they aren't treated they may just use other lousy coping mechanisms instead.
I hope your friend's son gets the help he needs.