Short for 'defective', which means 'the
Ultimate', superlative, better than good...
This started some
time after Michael Jackson's "I'm Bad" video, in which 'bad', of course, meant 'good'.
So, to denote a meaning that means the
ultimate superlative of 'good', people started using 'defective', which of course is the ultimate superlative of 'bad', and which then was simply abbreviated to 'def'.