May revealed that the Kankers used to play with it in the bathtub, meaning they played with it when it was just a ship, and was bottled later because Ships-in-a-Bottle are not supposed to be played with. It is their most prized possession as they show that if it is ever taken from them, they will go on a hissy fit and do anything to get it back, even by destroying anything in their path no matter how big or powerful it is. This is why it is the most dangerous item in the show that is not to be tampered with.
Home Cooked Eds
The Kankers' Ship In-A-Bottle appeared in an earlier episode, Home Cooked Eds. When Jonny dives into the Kankers' trailer to retrieve Plank from the Kankers, after he jumps out through the top and while the Kankers try to grab him, a Ship In-A-Bottle is briefly seen flying out of their trailer along with their other junk.
The bottle appeared for the second time. When the Eds were about to dig to get Eddy's Brother's suitcase. Edd and Eddy looked underneath the trailer showing all the Kankers' garbage, the Ship In-A-Bottle appeared briefly with all the junk.
Run for your Ed
When Ed broke into the Kankers' trailer storming off to find food when he was sleepwalking, he stole the Ship in-a-bottle from the house. When the Kanker Sisters managed to realize that there was a sloppy stranger who broke into their house, May found the Ship In-A-Bottle missing. Soon, Lee made a plan: "to find the bottle, Kanker Style!"
Soon, they attacked the Cul-De-Sac kids and destroyed Rethink Avenue while on the hunt for the bottle. At the same time, Edd and Eddy tried to remove the bottle from Ed's finger which the bottle was stuck to all day and none of the plans worked. When the Kankers attacked Sarah, beat her up, stuffed her in a bag & duct taped her mouth, she revealed that Ed had their Ship In-A-Bottle.
The Kankers arrived at Edd's House (the only house not destroyed in The Destruction of Rethink Avenue), destroyed Edd's House's door, and the Eds hid in the pipes below the sink. The Kankers however forced them out of the pipes by turning the faucet on. Then, Lee removed the bottle out of Eds' finger like it was nothing (the Eds were unable to get it off of Ed's finger up to this point), and the Kanker Sisters fought over the bottle as they walked back to their trailer.
The Ship In-A-Bottle later appears in Level 5 of Ed, Edd n Eddy - The Mis-Edventures, where the player needs to bring the bottle to Lee as a "present". It is unknown how the Ship In-A-Bottle got into The Old Abandoned House, although it might have been put there by the Kankers.