1.) A city in the country of Mali, which is in Western Africa. Was once a major trade city and centre for Islamic religion in the 15th and 16th centuries. Mostly used nowadays as an expression, when people want to emphasise how isolated, inaccessible, far away or in the middle of nowhere a place is.
2.) A place that you didn't think actually existed, but it does.
Person 1: "You never come around to my house anymore."
Person 2: "Ho, that's because you live all the way out in Timbuktu."
Person 1: "That place doesn't even exist."
Person 2: "Does so."
*Person 1 goes to look it up*
Person 1: So it does!