Not to be confused with Player Skill.
Giving XP or other mechanical rewards for non-mechanical performance, like acting in character or giving great descriptions. Usually used in a derogatory manner. This article will make a difference between “hard” (permanent bonuses) and “soft” (temporary bonuses), though that is not something commonly done.
Poodle points are a bit of a complex and divisive mechanic among many roleplaying gamers. This is something that can and have lead to heated discussions and insults - occasionally feuds.
Some of the objections to poodle points are:
“Softer” poodle points, such as Inspiration in D&D 5E or stunt bonuses in Exalted, are usually less reviled, as they are less lasting, given straight away and usually benefit the group and increase the session enjoyment.
Example of games with hard poodle points: White Wolf's games (Vampire, Exalted, etc) Games with soft poodle points: Exalted, D&D5E (Inspiration, Advantage)
Further reading See Further reading in this link for a discussion regarding the mechanics.