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A Softmod is the act of using software to modify hardware such as a video card or sound card in a way that can unlock or enable disabled features, usually pipelines. Cards that can be modified using software to faster versions (without regard to clock speed) usually contain much of the same hardware. Softmodding a card should not include changing the video card's bios, as that's considered a bios flash. There are only 3 current softmods that can be done, a Radeon 9500 NP to a 9500 Pro, a Radeon 9800SE (with 256-bit L-shaped memory) to a Radeon 9800 Pro, and a GeForce 6800NU to a 6800GT. The act of a softmod usually enables pixel rendering pipelines, though may also include other enhancements. A softmodded card may not always reach the same performance as the real card it has been changed to, but the difference should be very little; and generally not noticeable. The softmodding is not guaranteed to always work, sometimes the pipelines have been disabled for a reason - enabling them produces artifacts.
Softmod in terms of the X-Box
Softmod is also a term used to refer to modifying one's X-Box without the use of a mod chip.
Softmods for X-Box include a font exploit installed through exploits in savegame code for MechAssault, Tom Clancy's Splinter Cell, and 007: Agent Under Fire which allows an additional option to be added to the X-Box Dashboard, usually for booting Linux. The Font-hack works by hiding X-Box executable code in the X-Box fonts which are loaded at start up. However, since the X-Box boots up require precise timing from all parts of the system, from DVD-ROM drive spin-up time, down to the RAM, and since the hardware clock time is saved using a capacitor instead of a battery, when the capacitor runs dry, and the clock time is lost, the boot order is changed, and users experience a clock-loop where the X-Box loops, continually rebooting until the timing is fixed enough so that the user can enter in the correct time, and continue the boot up process normally.
An alternative to font-hacks are audio hacks, which do not cause the afore mentioned clock-loop problem. The audio hack works similarly to the font hack, by hiding executable code in an audio file that triggers a file to be hidden somewhere on the X-Box hard disk to kill the dashboard, and boot up alternative code. However, there are rumors that certain audio hacks may cause the custom sound track function in some X-Box games to no longer be usable, and there are rumors to the contrary.
Other uses for softmodding often include outright replacement of the Microsoft Dashboard and replaced with other dashboards, including UnleashX and EvoX. Since the overall boot system is changed, and the audio files remain untouched, the X-Box is neither plagued with the clock-loop problem, nor are custom soundtracks disabled. However, Microsoft is more easily able to detect such softmodding and is able to more easily ban user's X-Boxes (not their accounts) from XBox Live. This method is usually accomplished through the same exploits used to install the font hack.
All softmodding of X-Boxes is considered a violation of warantee and runs the risk of rendering an X-Box almost unusable, if not preformed properly. There are still lingering questions of legality.