Well, quite basically a shorter way of saying 'masturbating with a dildo'.
Don't ask what we were talking about when we made up this word.
person 1 - OMG i just saw a chick in a video dildobate with the biggest one i've ever seen....
person 2 - what's dildobating?
person 3 - bating dildos, stupid
person 1 - no, you're both stupid, it's masturbating with a dildo.
person 2 - oh. i knew that.