It means Chill The F*** Down, or Calm The F*** Down, usually used when one person gets mad at something simple, which wasn't meant to insult. Also used to calm someone down before a Beef
#1 "Dude, Stace went to the Movies with Robert"
#1 "Dude, CTFD she went with her Posse
"Yo mamma so stupid she put paper on the television and called it paper view!"
"What you say 'bout my mamma?!?!"
"CTFD, It was a harmless joke"