Recode can have two different meanings in psychology.
The first meaning is in the realm of memory and knowledge. Recoding is when we take knowledge already in our memory and change the format in which it is stored. An example of this is chunking, a memory technique in which large sets of information are remembered by grouping or 'chunking' pieces together in more memorable sets.
The second definition of recode is used in statistical testing. When running statistical tests variables are typically coded which means they are assigned a number (or letter, just any shortened identifying title) in order to make data entry more manageable and go by faster. When doing observational research behaviors of interest are coded so that they can be recorded in a more efficient manner. For example, a researcher doing an observational study on the pro-social characteristics of toddlers might code the common behaviors in order to record them more quickly in a busy play setting. So they might use 1 for toy sharing, 2 for cooperation, 3 for helping behaviors, 4 for hugs/physical contact, etc. To recode means that you change the code from the initial choice to another for some other reason.