We start with a known representation of the subgroup $H$, and construct a representation of the group $G$. In this sense, the latter representation will be "induced" by the former; hence the term.
The known representation of $H$ is acting in the space of linear operators ${\rm{GL}}(W)$, where $W$ is a linear space (say, that of all square-integrable functions). However, the induced representation of $G$ will be acting on a subspace $V\subset W$ of the {\it{Mackey functions}}, those defined by the subsidiary condition
$$
V = \{
f \in W
\mid
\text{$f(hg) = [\sigma(h)f](g)$, for all $h \in H$, $g \in G$}
\}.
$$
The induced representation $G \to {\rm{GL}}(V)$ is implemented by the operators
$$
\pi_g f(x) = f(xg)\quad\mbox{for all}\quad g,\,x\in G
$$
Had the function $f$ belonged to the space $W$, we would have said that this is a map $G\to {\rm{GL}}(W)$, and would have stopped there. However, we agreed that $f$ obeys the subsidiary condition; so $f\in V$, wherefrom
$$\pi:\quad G\to{\rm{GL}}(V).$$
This enables us to make one more step. Consider the quotient space $H\backslash G$ of cosets $Y = Hg$ and choose a ``representative'' $r(Y)$ for each coset $Y$. Then a coset $Y$ can be written as $Y = H~r(Y)$. As soon as we apply the definition of the induced representation to a representative,
$$
\pi_g f(r(Y)) = f(r(Y)~g),
$$
we can employ the subsidiary condition to find the representation for the entire coset. To do so, we start out with
$$
\pi_g f(r(Y)) = f(r(Y)~g) = f( r(Y)~g~r^{-1}(Yg)~r(Yg) )
$$
and note that the coset $Yg$ has a representative of its own, $r(Yg)$, so it can be presented as
$$
Yg = h(Y,g)~r(Yg)\quad\mbox{where}\quad h(Y,g)\in H~.
$$
Combining the last two equations, we see that $h(Y,g) = r(Y)~g~r^{-1}(Yg)$, and we finally write down:
$$
\pi_g f(r(Y)) = f(r(Y)~g) = f(~h(Y,g)~r(Yg)~) = \sigma(h(Y,g)) f(r(Yg))~.
$$
It is therefore sufficient to define the induced representation on the cosets (technically, on the cosets' representatives), whereafter the subsidiary condition automatically extends the definition to the entire group $G$.
With $r$ denoting a section, i.e., a map from cosets to representatives, the above equation assumes the form
$$
\pi_g f\circ r (Y) = \sigma(h(Y,g))~f\circ r(Yg)~.
$$
Obviously,
$$
\omega = f\circ r
$$
is a function acting on the coset space. Such functions are named Wigner functions, and in their terms our equation can be written down as
$$
\tilde{\pi}_g\omega (Y) = \tilde{\sigma}(h(Y,g))~\omega(Yg)~,
$$
where $\tilde{\pi}_g\omega (Y) \equiv \pi_g f(r(Y))$ and $\tilde\sigma(h)\omega(Y)\equiv\sigma(h)f(r(Y))~$.
We now see that this is a transformation law of the Wigner functions. The multiplier $\tilde{\sigma}(h(Y,g))$, called the Wigner rotation, is responsible for the Thomas precession in quantum physics.