Torsionally soft is a qualitative description of a mechanical device used mostly for shaft couplers. It indicates (to engineers) the sort of jobs the coupler is best suited for. Soft materials are more compliant. Torsionally soft devices are ones that accept some rotational displacement between parts. Different physical arrangements allow for couplers to be stiff with respect to some deflections and compliant in other axes. So one type may accept axial deflection but resist torsional deflection. A different design may be stiff axially and soft torsionally. So the term itself refers to the combination of material specs and design.
A torsionally soft device generally means that it permits a fair amount of "wind up" to occur between the shafts. Diesels have large torque pulsation and would cause a boat propeller to operate under constant high acceleration and deceleration. A carefully designed coupler and shaft combination can smooth that out. It absorbs some energy in the process, but can increase propulsive efficiency overall. Size and operating speed of the coupler determine the power delivery, so you can still deliver lots of power through soft couplers, you just need more of a softer coupler material to do it.
Highly Flexible Couplings, Torsionally Flexible Couplings, Vibration
Dampers: ... shift resonance frequencies in a driveline out of the
speed range. They also damp critical torsional vibration amplitudes
and torque shocks.
Meaning they have the ability to transmit energy, but with less vibration torsion amplitudes and shock. Any loss of energy is allegedly made up by less wear and tear etc...