Pictures would help you get better advice. Helps to see the type and extent of the damage.

Dry rot is a fungus and will spread. It is caused by excess moisture in the wood, which is a problem that needs to be fixed. Paint bubbling can also be caused by excessive moisture. So, you need to find the source of the moisture and address that. More details (is it in one area of the house or all around the house, have you repaired/changed anything, has the year been a particularly wet one, etc, etc).

The source of your moisture may not be from outside the house. People who close up attic vents can find their houses suddenly suffering from excess moisture. Failure of flashing can cause leaks on the inside of the siding. Etc, etc.

I believe the problem is mainly from rain/out side moisture. The house was in need of new paint job a while back and it never happened. We've seen a lot more rain over the past year and with each new storm it worsens a bit more. So this happened over time - the last year or so.

I'm just wondering if there is something I can do temporarily to prevent worsening without redoing the siding right away, strictly due to cost.

I am really worried since I know it can lead to larger issues. I don't have photos right now, but it looks exactly like what you'd expect wood rot to look like.

Hire a handyman/ trim carpenter to cut out the damaged sections and replace with new wood. Oil prime the new wood and any old raw wood, then paint it.

"I am really worried since I know it can lead to larger issues. I don't have photos right now, but it looks exactly like what you'd expect wood rot to look like."

Don't make us guess... A photo of the siding and age of the house would help a lot. Even if you don't know the age of the house, a photo of the front would probably tell us the age.

I've worked on homes from the 1880's, 1900, 1920's and one in the 1940's. I know a little something about wood siding.

In my experience (New England) plenty of houses have naturally weathered siding that does not rot. My 100 year old house was not painted for at least 50 years and has plenty of the original siding. I suspect you have some moisture issue that is not just siding in need of a paint job, but you'd have to post pictures.

Fixing siding without at least replacing full boards is touchy if you know what you are doing. Telling someone how that doesn't know is akin to dreaming. You might find a handyman to patch it up but I doubt a siding contractor will get close to it. I once used pieces of thin aluminum to patch over bad spots in siding but not knowing what you have I wouldn't know where to start.

Thanks everyone for the feedback! I'll try to get some photos up tomorrow to provide a better picture of the issues I'm facing. The house is ~70 yrs old. I've also learned that there was dry rot & termite damage found during an inspection a few years back, but the issue was never addressed. And from what i've been told, the exterior was actually repainted within the last 10 years.

Some photos

I Added a few photos of the areas with the most damage. Thanks again everyone for the advice.

Paint will not stick to rotten wood. If the rot is in one or two places (like the bottom of the house, under a window, etc) then it can be fixed.

The areas you posted pics of are beyond repairing. Nothing will stick to them. Time to replace unfortunately.

I guess my question would be, would it make sense/be possible to replace the siding just in those damaged areas, or does it typically need to be a replace everything type of job?

Sorry if these are stupid questions but I just got tossed into this and I have no idea what I'm doing! :(

Would I need to be specifically looking for a siding company, or a company like a general contractor/painter that says they do siding repairs?

The first thing to do, is figure out why the siding is rotting in the first place, and get whatever that is repaired, then replace those pieces of siding. If you dont repair the cause, you will be doing the same thing again, in not too long a time. Have you had a contractor look at what you have there? If not, you need to find a reliable one, and have him look at it, and give you an estimate on repair.

A picture from a bit further back would give some more insight as to what needs to be remediated to make sure this doesn't happen again. Carpenter should be able to fix that pretty simply as Jake said and if he is good, he should point out where the water is coming from whether it be normal edge creep or somewhere else.