A word first come to prominence in the Hans my Hedgehog portion of Jim Henson's The Storyteller series, the first appearance of which reads:
"She wanted a baby, a little thing of honey and softness, to wrap up in a bundle and sing to and snoodle with and hug to bits."
In a storytelling conceit of repetitious orality, subsequent mentions of the word appear only sandwiched in similar phrases - snoodling is never done on its own, but only after being wrapped or caught up and sung to, and always before being hugged (to bits, mind you - a mere hug apparently has no place in the company of a properly-executed snoodle.)
This noder's speculation is that the act of snoodling consists of rubbing noses Inuit-style (non-exclusively - it can also involve cheeks and a bit of mouth contact is not unknown), the word possibly a corruption of snootling from snoutling, with the shift from t to the softer d making it sound more verby and less like a snotling-style entity living inside one's nose. Also perhaps derived from the Danish snude. Another noder's speculation is that the word is a portmanteau - cuddling while snoozing or canoodling(?!) even.
As with many somewhat-innocuous, relatively unknown and unused words, it seems to be the case that either through parallel generation or appropriation this term has been given a new meaning through the hitherto-unmentioned (let alone named) plethora of sex acts between two men.
In this new context the case seems to be that "snoodling" occurs when the tip of an erect penis is placed inside the facing foreskin of another penis and moved about until satisfaction is attained. No singing or hugging to bits appears necessary - just two dinks.
Keep these disparate definitions in mind the next time someone approaches you in a dimly-lit bar and offers you a snoodle - what you end up getting could be much more (or less) than what you were hoping for. | 
