Turtling is when a player uses stellar manipulation tech to close off all warp points to a system or group of systems, then prevents the opening of new warp points into that territory either by use of the system gravitational shield facility or the 10 warp point limit.
The player is then cut off from the rest of the galaxy, completely powerless to attack his enemies but at the same time utterly impervious, like a turtle retreated into its shell. Even diplomatic and therefore intelligence contact can be broken in this manner if the turtled player has no colonies outside of its "shell". Even if the turtled player intends to come out and fight eventually (using the turtle-time to build up forces) this behaviour is very frustrating for other players who execute turn after turn waiting for the player to "come outside and play". Therefore this practise is often frowned upon in multiplayer.
Human players can use turtling to exploit the AI's remarkably short memory: When a player who has lost contact with an AI re-establishes contact, any grudges the AI previously had are forgotten. This is generally regarded as an abuse.
See also: Contact for SEIV