When something is cool and awesome but in a dorky or cheesy manner. Such as pee wee herman, the fraggles, or watching the clouds pass overhead as you listen to owl city and sip on tea.
Sweet! I'll definately play hungry hungry hippos. That game is mad coolio.
Star wars is so coolio.
Obeying the law, getting good grades, and saying no to drugs. Darn, if those those things aren't coolio then I don't know what is.