Usually used in sentences like

"Och aye the noo"

or Scottish Rhyming Slang

"Och aye the noo broon coo"

"Och aye Jock McKay"

Or in non descript replies to questions like

"nice day isn't it big man"
"the bairn's are growing up fast"
"fancy a pint"

Its not really used anymore except as a joke term or amongst older Scot's.

Och like Loch are unpronounceable by Americans and Canadians who say Ock and Lock. (bastardisation of two lovely words) *shivers*

Sometimes a simple "Och aye" will come out with a contented exhale of breath. As in "all is well"

Och aye, laddie, fetch me another beer or else i'll lay the paddle to yor arse!