1. something is pretty shit hot.
2. to describe material of a sexually explicit nature that is stored in the highest point of a shop.
and my old favourite;
3. to describe a female as being rather atractive in a sexully stimulating way
2. that dirty old cunt reads from the top shelf
3. A:"fuck me she is top shelf! marks out of ten i'd give her one."
B:"not half! woof!"
The phrase is derived, not from the position of premium bottles in liquor stores, but their position behind bars. (as opposed to "well" liquors, which are stored in the bartender's speedrack well, and "call" liquors, which are popular but not displayed (and which must be "called").