According to the Urban Dictionary, it's along the lines of "whatever, screw it, forget about it".
It's use in my world is somewhat "self-leveling". The situation may not be what we want, it may not be what we'd hoped or worked for, it may not even make sense, but "it is what it is".
(You know... you don't get what you want, you get what you get.)
So what is "it"?
"It" is the reality of the situation.
"It" is the realization of the limits or boundaries of something.
"It" is the acknowledgment of one's concluded thoughts after serious contemplation.
"It" is something we cannot control, and we have the power to not let it control us.
"It" exists and our responsibility is to figure out what to do with "it".
What are your thoughts?
Would you respond, "They are what they are?"