An affirmation that you agree with or can relate to the preceding statement. It can be used whether the speaker actually knows or not, but in the latter case it usually means that the speaker can attribute the preceding statement to themselves as well.
"I got so drunk at the party that I puked when I got home." "I know, right? I think I might have barfed up stuff from last year."
"My parents are such trogs." "I know right? Mine think my LJ is a literal notebook."