Loafing is when your rabbit fluffs up into a ball and looks like a loaf of bread. This is generally a comfortable position for rabbits and they’ll often sleep in this position, especially in the colder months.
This is a neutral position for a rabbit. They are not in a ready-to-run stance, but it’s also an easy position for a rabbit to dash out of and make a run for it if they get scared. But don’t worry if your rabbit seems to prefer sleeping in a loaf instead of sprawling or flopping. Many rabbits are just more comfortable this way.