It was a party game for young children in London in the 1940s/ 50s.
Children sit in a circle facing inwards.
One walks round the outside singing (chanting?)
"I sent a letter to my love
On the way I dropped it
One of you has picked it up and put it in your pocket"

She drops a handkerchief behind someone who then (when they notice) races in the other direction. The first to reach the gap sits in it, the other is 'it'

There wouldn't really be much room for this in an average sitting room, so I suppose it was more for organised events like Sunday School parties, Brownies.