To feel very comfortable/cozy.
This expression is presumed to allude to a clothes-moth cocoon happily ensconced in a cozy rug.
The phrase appears in an anonymous work in 1769 but is usually attributed to Benjamin Franklin who wrote a letter to Georgiana Shipley in 1772 commiserating her on the death of her pet squirrel named Skugg saying,
"Here Skugg lies snug
As a bug in a rug."
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