This is a very common euphemism for female masturbation. Due to all the gouging, long strokes, and various tools involved in carving soap, this activity makes the perfect euphemism for masturbation.
Synonyms: Flick the bean, strum the guitar, tune my ukulele ...etc
Sally: okay babe thanks for the chat, I'm gonna go carve some soap now!
Heather: ooh, have fun! ;)