Phrase used by inmates mostly in juvenile type facilities, such as detentions and other types of kid prisons. One inmate says this to another when he/she wants to fight the person they are saying it to. The bathroom is a place where staff cannot see the fight take place, so no one gets in trouble.
Outside of lockup, many people still use this phrase as a joke, upon disagreement.
What are you talking about? That band rocks! Meet me in the bathroom !