It's basically like saying: Something has improved, but not enough to say that it's 'better'
Note: An emphasis (italics) is usually placed on the last "er" to make clear the lack of substantial improvement.
Child: How do you feel I'm doing with my sparring?
Karate Instructor: It's ... better'er' - you still got some work to do.
Person 1: How are you doing in school?
Person 2: I'm doing betterer ... I'm still getting some Cs though.
Is is a word used by bogans whom believe that you can make something broken more than better.
Only a true bogan will use a word like betterer
Shazza: Did you make it betterer?
John: What the F&*K are you on about? How can you make something betterer when its fixed? You Stoopid bogan!