Making words in a sentence seem kinder than what they are to avoid hurting someone's feelings.
some fat kid: dude, are you gonna eat that?
some guy: yea man, boy why do you always ask for other people's food?
some fat kid: because i'm always hungry.
some guy: you are so fat man, and i'm not going to sugarcoat it neither because you'll probably eat that too.
Something undesirable dressed up or talked up as if it is something desirable and sweet. It may be sweet on the outside, but it is still poop at the core. Similar to the saying "lipstick on a pig" (except 'lipstick' often refers to people, and 'SCT' to an object).
My coworker tried to dump her project in my lap, but in this sickeningly-sweet way, like it was a sugar coated turd...like I wasn't supposed to notice or acknowledge it was a turd simply because it had sugar sprinkled on it!
In order to sell a travel package to a certain impoverished third world nation, the sales agent found that she had to sugarcoat the scenario by emphasizing such aspects as the resort's amenities and the region's year-round tropical climate.