A general term of affirmation upon hearing some bit of news for which no other word or phrase fits. To be used in place of fuckin' A, hell yeah or yeah boi. A versatile term, it may also be used in place of expletives when they are not appropriate.
May also be used alone, randomly, as a general expression of glee.
"Skittly dee, Carla just got her period."
Scott: "I just found out my dad is gay."
Sally: "Well.......... skittly dee."
"Skittly EFFING dee, who do I have to blow to get a good latte around here?"