Coconut oil is one of the few saturated fats that doesn't come from animals, but like other saturated fats can raise cholesterol levels and, therefore, should play only a very limited role, if any, in your diet. In the past, it was widely used in movie popcorn, candy bars and commercial baked goods but was phased out of many of them because of consumer opposition to unhealthy tropical oils.
Now coconut oil is being promoted as a weight loss aid; it is also touted in a book by a naturopathic doctor. The rationale goes something like this: as a source of medium-chain triglycerides (MCT), coconut oil isn't stored in the body as fat as readily as oils composed of long-chain triglycerides (LCT). Some research from McGill University in Canada suggests that this is true; MCTs also boost metabolism and satiety, and therefore may promote weight loss when they replace LCTs in the diet. Because they are so easily digested, MCTs are given in hospitals to provide nourishment for critically ill people who have trouble digesting fat.