A phrase often used towards someone who states the obvious.

meaning 'well of course dumbass!'
other phrases like this include grass is green

duh.

what you say when someone says something very obvious.

Stating something obvious, this is a sarcastic way of saying "It's very obvious, you can shut up now."

The victim can follow up with "Fuck you Watson" or similar to defend themselves.

A very sarcastic way of saying: obviosly.
(Sherlock Holmes was a detective in a classic series of books.)

It's like the person said something that was pointing out the obvious....kinda like "no duhh!"

No shit sherlock is used to insult someone who is stating to blatant obvious. similar to "you don't say" or "thanks captain obvious!"

if someone is saying something obvious instead of saying "no fucking shit" you would add "sherlock" to it just to insult them further.