In electronics, encapsulation refers to the protective housing of a component or circuit to shield it from environmental stressors while maintaining necessary electrical connections. 1)
There are two ways of encapsulating the IC :
For processors, encapsulation also serves to increase thermal dissipation surface area. The CPU can be molded to ensure thermal dissipation or it can be topped with a metal lid, the second option is usually chosen for large and resources consuming CPUs such as server ones.