A technique most often used for preparing eggs, this method is where a food is cooked in water kept just below the boiling point. Historically, the term and technique have been applied to fruits. For example, a coddled apple is coddled in water, sugar/molasses, and spices for seasoning.
Now, if you’re wondering what makes this any different from poaching, here’s the difference: the food is not cooked directly in the water. Rather, the desired food is cooked in a small dish that is placed inside the hot water. As a result, if you are coddling an egg, you will want to peel the egg after you complete the coddling process. Same thing goes for fruits if so desired.
The actual practice of coddling is difficult to trace back. Instead, I will use a famous dish as a baseline for how old the technique is: the Dublin Coddle. If this page from Kerrigans is accurate, the Dublin Coddle goes as far back as the 18th century, with the term itself coming from an Irish term, caídéal.
Insofar as purpose goes, it’s very useful for making tender, hot foods. Alternatively, if you specifically want to make a soft-boiled egg, this is one technique that you can fall back on. Go and give it a shot.