It's used usually to greet someone on a friendly, casual, carefree way. For all practical purposes it means "hey, there". It's used specially among young people but some adults use this as well. This expression may not be used in a serious formal conversation, because it could be considered rude or cheeky.
"Qué pedo?! Cómo estás?"
"Bien, aquí trabajando."
"Hey there! How are you?" "I'm fine, just working."