Scalding is heating a liquid to just below boiling point, 185°F (85°C). Scalding serves four main purposes, although the advent of pasteurization has eliminated the need for scalding for the purpose of killing harmful bacteria. The other reasons are to infuse flavor into liquid, to achieve a better rise in breads from the unfolding of proteins, and to dissolve sugars and incorporate other ingredients.
Scalding is most often used with milk which is heated on medium low heat until the mixture is warmed all the way through and just reaches the boiling point. Visually, the point of scalding is where you see steam beginning to rise and small bubbles form around the edge of the pan. It is important to stir frequently to distribute the heat evenly and prevent sticking. Also, do not to allow the milk to boil as temperatures at the boiling stage will change the chemistry of the milk which can affect your recipe.