Indicates strong agreement to a comment made by someone else, especially when that persons comment is a bit of an understatement, or states the glaringly obvious, or both.
Effectively equivalent to the phrase "That ain't no lie!!" or "Ain't that the truth?!", but said with great enthusiasm.
During a heavy thunderstorm, your friend says "It's a little bit wet outside." You respond with "You ain't shittin' kittens!!"
Two retail employees get done dealing with a difficult customer. In private, one says to the other "That guy was a douche!" The second responds with "Pfff, you ain't shittin' kittens!!"