When plywood’s surface veneer becomes weatherworn, it may crack, or “check,” and begin to peel. Repair is easy, but the trick is to match the finish on the patched area with your siding.
You will need paint or an opaque stain that is an exact match, so test your replacement finish somewhere on the siding where it will not show.
Sand down the cracked area and apply a flexible, all-purpose exterior vinyl spackling compound, using a putty knife. Smooth the patch before it hardens. Allow it to dry, lightly sand the patched area, and finish it to match your siding.