After a yarn is spun, one wants to remove it from the drop spindle to make room for a new one or to work with it. One possibility to do so is by winding it into a ball; however, there is still a lot of tension in the yarn so that it'll have to rest quite a long time before it can be used without entangling it in itself. Another possibility is to wind it on a niddy noddy. Whether the Viking Age people used this tool or not is not to the question, since there are archaeological finds from Oseberg/Norway and Hedeby/Denmark (now Germany).
On the niddy noddy, the yarn is wound into a stretched skein. It can lie there for some time until the tension is gone; this process can be sped up if the yarn is soaked in water and then left on the tool to dry. When it is removed from the niddy noddy, it can be bundled up and stored away or it can be dyed. As a skein, the yarn is loose enough so that the dye can reach every part of it, whereas a ball of yarn would only be dyed on the outside and the inside be left undyed. At the same time, the skein won't become a hell of entangled woolen spaghetti if it is secured at a few spots.