Soft light refers to light that tends to "wrap" around objects, casting diffuse shadows with soft edges. Soft light is when a light source is large relative to the subject, hard light is when the light source is small relative to the subject.
This depends mostly on the following two factors:
The softness of a light source can also be determined by the angle between the illuminated object and the 'length' of the light source (the longest dimension that is perpendicular to the object being lit). The larger this angle is, the softer the light source.