You would design an ASIC, and then programmable logic (FPGA is one type) would be used for low volume production so you could test and revise the design. Then once the circuit had been adequately tested to ensure it was working correctly, traditional fabbing/manufacturing would be done for higher volume production.
And I'd guess Drako is right about the soft IP part. FPGA design software will often include a library of pre-designed circuit blocks (for example, ARM CPU cores) that can be quickly and easily added to a circuit. So instead of having to design your own CPU from scratch, for example, you can just pull up the IP library and add one from it.
I still think he could explain it better than anyone here since it's what he does every day, lol. But this would be my guess. Hopefully it's helpful.