The verb sheathe means to place in a sheath. What's a sheath? Well, that's any kind of protective covering.
With that extra "e" on the end sheathe gives off a very old English vibe. Perhaps that's because all those knights were often sheathing their swords so as not to scare the fair ladies. Those knights were also sheathed in armor when going into battle or setting off to joust. These days, with medieval armaments in low demand, not much gets sheathed — except maybe the kitchen knives in the knife block or your cat's claws when they retract.