"Soft-cap?"

I have seen this mentioned so many times but still don't quite understand what exactly this is or how it works. What is the "softcap" in gaming terms?

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You know, like a beret, or a tweed country hat.

(Okay, okay - it's the maximum effective rank you can get a given stat to. I'm not 100% on the mechanics of it all.)

It's not "softcap in gaming terms" It's softcap in CoH/CoV terms.
A softcap is having your defences up to 45% at which point most enemies will only have a 5% chance to hit you, which is the absolute minimun chance for enemies to hit and can't go below that regardless.
Know that most enemies have a base 50% chance to hit, factoring in 45% defence that's the floor ToHit for enemies. That's the softcap you hear about.

P.S: Note I said "most" not all. There are enemies with a higher chance than 50% to hit. For example the enemies in the new Incarnate trials have a base to Hit of 64% instead of 50%.
P.P.S: There's more for the "hit" and "miss" than just this. If you want to know more you can try reading this article.

Thankyou for a simple and concise explanation. It is a cap possibly made of soft material.

Oh... and it has something to do with the minimum chance for an enemy to hit. cool

For a general definition, "soft cap" means "effective cap" -- it is possible to go beyond the soft cap, but going beyond doesn't get you much more than being right at the softcap.

In the case of defense in CoH (the most common usage of the phrase), it means 45% -- critters have a base 50% chance to hit you, 45% defense will lower them to 5% (multiplied by their accuracy), and the game won't let their hit chance go any lower than that. In some cases, opponents will have a higher tohit, such as certain specific enemies and everything in the Incarnate content. In those cases, 45% isn't sufficient to floor an enemy's chance to hit you, but it's a good starting point.

Soft cap is a general term, however, and you may end up encountering someone using it to refer to the effects of Enhancement Diversification -- at approximately 95% for Schedule A enhancements (Accuracy, Damage, Endurance, Recharge, etc... the ones with 33% SOs), the effectiveness of further enhancement drops so sharply that it isn't worth your time to add more. The case is the same at about 56% for schedule B (Defense, Resistance, etc... the 20% SOs), ~112% for Interrupt, and ~168% for Knockback.

Pretty much "what they said."

A hard cap is a "Thou Shalt Not" built right into the rules of the game. Thou Shalt Not fly faster than x speed, Thou Shalt Not get more than 75% damage resistance on a scrapper, whatever.

A soft cap is "there's no point, most of the time". As far as Defense, specifically: most of the time, 45% Defense works exactly like 245% defense (if you, I dunno, took sixteen small purple inspirations.) There are times when more than 45% Defense is an advantage- but they're relatively rare.

Edited because I'm a weenie: There are SOME times when additional Defense helps. Devouring Earth Quartz drops, nothing helps; Ruularu [sp?!?] eyeballs, nothing helps; but lethal damage cascading failure [e.g. Malta or large numbers of Council] can be avoided. Rikti drones have to-hit bonuses, and so do Malta Gunslingers [those might be too large to work around, I don't know.]