When the water in the newly designed electric coffee pots passed through the ground coffee in the basket, it was percolating. In this context, percolate is defined as the process of a liquid, in this case, water, passing through a porous material--ground coffee beans--to obtain a soluble substance, brewed coffee.
Percolate describes how substances leach or slowly ooze into something (much like water through coffee grounds). For instance, "The fertilizer percolated the layers of soil in the garden." It may also indicate an ongoing state of agitated activity, as in, "Their disdain for each other had been percolating for months."
Percolate is also frequently used term for anything that slowly spreads, as in morning light percolating through the trees or a windowpane. In a more figurative context, percolate is used to describe information or hearsay slowly spreading through a neighborhood or region.