Coconut oil (Cocos nucifera L., Arecaceae), known classically as Narikela Taila, occupies a uniquely positioned chemical space among edible carrier oils. Its triglyceride matrix is dominated by medium-chain fatty acids (MCFAs), with lauric acid (C12:0) alone accounting for 45-52% of total fatty acids and the combined C8-C12 MCFA fraction reaching approximately 62%. This narrative review synthesises 46 published sources (42 peer-reviewed studies and 4 classical Ayurvedic primary texts) across phytochemistry, lauric acid biochemistry, fractionation chemistry, transdermal permeation, and dermatological applications, with the integrated aim of evaluating coconut oil as a periumbilical (Nabhi-route) carrier in Ayurvedic formulation. Phytochemical analysis highlights the compositional and processing-grade distinction between virgin coconut oil (VCO), which retains phenolic antioxidants (10-20 mg gallic acid equivalents / 100 g) and trace tocotrienols, and refined-bleached-deodorised (RBD) coconut oil, which retains the fatty-acid skeleton but loses ~85% of polar phytochemicals. Fractionation chemistry allows separation of the liquid medium-chain triglyceride (MCT) fraction-enriched in tricaprylin (C8) and tricaprin (C10)-from the higher-melting C12+ stearin fraction, yielding a pharmaceutical-grade carrier with a melting point below 5°C. Mechanistic review of lauric acid identifies four convergent bioactivities relevant to topical Ayurvedic formulation: (i) penetration enhancement via reversible disruption of stratum corneum lipid lamellae, with reported flux enhancement varying substantially by permeant and test conditions across published studies; (ii) in-situ monolaurin formation conferring antimicrobial activity against skin commensal organisms in published in-vitro studies; (iii) skin-emollient and barrier-reinforcing activity through squalene-mimetic lipid chemistry; and (iv) an exceptionally favourable general irritation–sensitisation profile; paediatric-specific topical safety data are addressed separately as a knowledge gap rather than assumed. Relevance to Nabhi-route application is supported by coconut oil's general skin-compatibility profile and its mechanistic basis in lauric acid biochemistry, with paediatric-specific topical application treated as an area requiring dedicated future evidence rather than assumed (Section 8.2). The review identifies five standardisation and evidence gaps and proposes a quality-control framework for coconut oil and its fractionated form in AYUSH-compliant medicated oil preparation.