used to answer someone when they are looking for something, whether you don't know where it is, you ACTUALLY ate it, or if you feel like sitting back and laughing at them while they look for the thing even though you know where it is.
If a person is asking for the where-abouts of a female, the scenario could have some sexual undertones. (I ate her).
1: Hey have you seen the cookies?
2: I ate it.
(in the above senario, person no.2 ate "it" not them, therefore it ambigous as to whether he actually ate the cookies.)
People in love, or seen to be giving affection through kissing or hugging or holding hands etc. It could be used to describe people having sex, but really its too childish to be used in that type of reference.