It's used to ask forum goers are they jealous, because someone on the forum has something that others don't have, and they want to show it off, to make other people Jelly.
Anonymous 2: Yes I very much am Jelly!
Similar to "U MAD, the phrase is typically said in a boastful manner to cause annoyance. On imageboards, the expression is often accompanied by a cartoon character wearing a smirk.
Lvl 100 in lol, u jelly?