This is an old skool term. When you're having a dance-off at a house party, frat party, family party, party of any kind really, where everybody is either in a big circle throwin' down and one person at a time goes in the middle doing their 'thang', or there are two parallel lines of people groovin' and cheerin' on one person at a time as they dance all the way down between the two lines. After this competition has been goin' on for a while, some diva who think she's the shiznit may jiggle her junk up next & cross her arms with a 'tude' a pouty lip standing totally still. This shuts down the whole dance-off, they alll just got sugarbooked. Everybody just got played.
For example: "Kanye was break dancin' was so dro and he was flippin' it up on his head til LaQuinta walked her fine ass up and sugarbooked it." "Ah naw she dident" "Ah yeah she did", "Damn, dude, dats just wrong" "Furreal doh dude"