Iotation is a form of palatalisation which occurs in Slavic languages. In most of them, iotated consonants are called soft consonants and the process of iotation is called softening.
It occurs by the mixing of a consonant with the palatal approximant /j/, which is in the Greek alphabet represented by iota (ι), hence the name. For example, ni in English onion has the sound of iotated n. The example on the right shows how the Serbian language uses iotation to express the plural of a certain class of words.
An iotated consonant is represented in IPA with superscript j after it and in X-SAMPA with apostrophe after it, so the pronunciation of iotated n could be represented as [nʲ] or [n'].
As it was invented for the writing of Slavic languages, the Cyrillic alphabet has relatively complex ways for representing iotation, devoting an entire class of letters to deal with the issue; there are letters which represent iotified consonants as well as letters which iotify adjacent consonants or prevent their iotation. Their exact use depends on language; see Cyrillic alphabet as used in Slavic languages.
The adjective for a phone which undergoes iotation is iotated and for a letter formed as ligature of the Early Cyrillic I (І) and another letter, which is used to represent iotation, is iotified.

Cyrillic letters for iotated sounds
When Vuk Karadžić reformed the Serbian language (the system still largely influential over the Macedonian language), he created new letters which represent iotated consonants. This was possible because in Serbian and Macedonian only a few consonants can be iotated. Though it might seem logical, the letters themselves are not called "iotated letters" or by any similar name.