Cold Character reading is a purely TPRS writing form. It relies on reading passages that are long and have a high degree of internal repetition. There is typically a high level of proximal repetition (“clusters” of new words or phrases, especially when they first appear) as well.
Legacy teachers, on the other hand, are increasingly holding out for “authentic” reading materials. Defined as text written by native speakers for native speakers, this kind of text makes little or no sense to me as a tool to teach people how to read Chinese.
The CCR response to that (at a point where students have done enough reading to have command of basic characters at least) is encapsulated readings. Encapsulated readings are simply long-form CCR readings, complete with lots of repetition, that are formed around small pieces of authentic text that remain unchanged. The CCR reading “uses” the authentic text while explaining it and making it comprehensible.
Let’s say a character is driving his car, and he sees a Chinese sign saying “Parking Prohibited”. This structure is one of those things that are common in written Chinese but would not come close to registering as frequent as a spoken expression. The legacy method would be to present students with five examples of “this or that is prohibited” and five without, and ask them to say what things are prohibited. Not really a very useful reading exercise — it is straight scanning, no real reading involved.
Now take that same sign and have a character encounter it, read it, perhaps look up one of the words in a dictionary or on his phone, talk to someone about what it means — all in a CCR-style reading. The authentic text has been made comprehensible in a larger context, which provides authenticity (not the native-writer for native-reader type, but real-world style) and simultaneously provides reading practice on continuous text and repetition on visual forms.
Not every TPRS reading needs to be encapsulated. But encapsulation of authentic bits is a good way to present them in a much more learner-friendly manner than simply having student memorize them, then sprinkling them into a paragraph once or twice. It’s reading practice AND a model of a real-world way of dealing with such things. Win-win.