How's it hangin' is a very informal way to say hello to your fellow. What is actually hanging, is evident from the following example.
by KAO1 November 2, 2005
How's it hangin is a polite greeting from one man to another. "It", in the context, is the man's penis. Presumably if it's hanging well, the man is doing well.
by RexGibson April 26, 2004