Usually used amongst friends, can be a merciful out for a person who starts talking and realizes halfway through their speech that they haven't a clue what the point they were trying to make was.
Your stoned friend who keeps endlessly blabbing on and on about the blue dophins of conciousness holding his eyelids open with a toothpick could be quickly shut up by being told "Dude - your mouth is open!"
I don't buy the schmegegge about Morty sleeping with Moira.
His version of the story was pure schmegegge.
The whole schmegegge was made up to get Liz a little bit of attention.
Looking or experiencing something nice after witnessing something horrid like a disgusting gif or a disturbing video. Typically used as eye bleach are nice images of whatever makes the disturbed person happy.