Actually originated about five minutes ago in my bedroom, but I will now provide a long and elaborate false story to back up my ideas and claims... *ahem*
Originated in 1521, when King Henry VIII of England said to his three most favoured courtiers; "Thou shalt disperse, and bringeth to me eight-and-ten tankards of thy finest mead. Whilst thou doeseth this most perfect of distractions, I shall make sweet, sweet love to thy maiden daughters, and impregnate them, in hope of finding myself a suitable heir...eth."
The courtiers duly dispersed to 'bringeth' their mead to the King. All but one, that is - Sir Franck Hitler (Adolf Hitler's great, great, great, great, great, great, great, great, great, great, GREAT grandfather, on his mother's side) who said, roughly; "No."
For this, King Henry took him to the guillotine, and ordered for him to be beheaded. Unfortunately, he stood up at the last second, deciding that he didn't want to die, and he got one of his balls and half of his penis chopped off. The king then laughed so uproarously, and said "I laugh so uproarously at this, as Sir Hitler's sch..." it was at this point that the king realised it was not only Franck's schlong that was chopped off, but also the majority of his junk. Using his notoriously quick wit, the King then turned the phrase into one of such cunning, it would be used... never untill I came up with it now, anyway, he then said "..junk was slicethed thusly from his body!" His maidens and courtiers then looked at each other rather puzzledishly. Sensing that further explaination was needed, the King explained further. They then laughed together so uproarously, that... well they laughed is the point. The king then made sweet, sweet love to the maidens (who later became his wives, but that's not really true either, and my fingers are getting tired) and drank mead untill he got randy with the minstrels.
(As you've probably guessed by now, this is the explanation of Hitler's one-balldedness - it's hereditary. Not really, but it makes the whole thing a hell of a lot more interesting, doesn't it? He actually only had one ball as he got an STD off a orostitute while living on the streets of Vienna as a failed artist. He had to have it amputated.)
Can also be used as a term of frustration.
Billy: "Woah, Tim, your mum's a MILF!"
Tim: "You arsehole!"
*scream of pain*
Billy: "Ouch, Tim, why did you just knee me in the schjunk?"
James: "Oh schjunk, I left my Bi-di-astrophsyiolgy-atrics homework at home... and my lunch!"