Meaning the absolute best. Occasionally twisted into
"The mutts nuts" or
"The dogs danglies"
According to The Dictionary of Slang (http://www.peevish.co.uk/slang/) it was first seen in 1920s UK slag amongst the Flappers along with the similar 'cats whiskers' and the 'bees knees'
The US/UK origin of this is different depending on where you do your research, but the majority seem to say UK so ......