Often used in fashion blogs. Used to describe an outfit that is too coordinated and consists of too many of the same types of colours, patterns, fabrics, accessories, designer pieces, thematic elements, etc. Can also be used in reference to interior design.
FabSugar on Kate Hudson's all grey outfit: "Before this, I didn't know there were degrees of being matchy matchy."
A: How do I look?
B: Too matchy matchy, try a different sweater.