The phrase itself means to brutally beat, maim, bludgon, stab and/or murder another individual. This individual taking the beating is noramlly an imbilclie, a.k.a. "Dipstick" or "dumb as a slab of meat" (deriving the root word "schnitzel"). This beating must also be done in a joyous, more towards insane, way (deriving the root word "goub").
This term is normally used in a type of joyful warcry by the assaliant.
Kid: (slaps bully, and straps explosives around the bully's face) "GOOBERSCHNITZEL!!!!!"
(Bully's head is incinerated in a brutal explosion)