Often users conflate the term “encoding” with “transcoding“. Encoding is taking a raw video signal, usually analog (e.g. tape-based material) and capturing into a digitally compressed format. This includes SDI – even if the signal coming across the SDI line is already compressed. Think of using the capture tool in your NLE or capture card – this is “encoding“.
Transcoding is file-to-file based, that is, converting from one digitally compressed file into another. Using tools like Compressor, Adobe Media Encoder, Handbrake, etc. are examples of transcoders.