There are two types of titles in the martial arts, administrative titles and teaching titles (shogo). Administrative titles are technically positions, rather than titles to be addressed by, and establish your authority of overseeing the system and your level of responsibility. Teaching titles exist as an extension of the Menkyo (license) system. The various shogo titles indicate hierarchy between the instructors of a system, as they follow a preset order of progression, and establish your authority of transmitting the system. The most common shogo titles are Renshi, Kyoshi and Hanshi. Shihan sometimes get thrown in there as a teaching title, while other organizations/styles use it administratively, so that will specifically depend on the style we're discussing.
Soke 宗家 is an administrative title. It designates the holder as the inheriting headmaster of the art they represent, much as the CEO is the head of a corporation. It is never meant to be used to address the person, just as you would never say, "Good morning CEO Smith," and it's most certainly never to be used by the holder in referring to themselves. Rather, it is most appropriately used in writing of official documents or when talking about someone. Then, like all other Japanese titles, it is to follow the person's name (i.e. John Smith, soke). So now that we've clarified the proper use of the title, what exactly does it mean to be Soke?