In the US, it is apparently a euphemism (or media-invented myth)for rather lewd naughtiness (see all other definitions). In the UK, it means jelly,
ice-cream and dressing-up as Zippy, Bungle,
Geoffrey, George, Rod, Jane or
Freddy and singing "The Wheels on the Bus". The latter seems condusive to a much more satisfying experience.
Yank: Dude, I'm so emotionally crippled and shallow, I went to this
badass Rainbow Party last night. Now I feel even more empty and my dick's kinda itchy.
Limey: I say, old bean, I had a Rainbow Party last week! We all had a beezer
time, despite Bungle having eaten too much jelly and ice-cream.