it is a shortened version on "what are you going on about?" or "what are you talking about?"
usually used when someone is not making sense for extended periods of time or if you feel like you've missed something.
can be lengthened to show complete and utter confusion.
knobhead: dude. i totally just pwned that n00b. i asdfghjkl; the ask;nfw. fo shizzle my nizzle dizzle.
awesome: what you on about?
knobhead: so, tomorrow, then?
awesome person: what?
knobhead: we can go and you can meet them, yeah?
awesome person: what you on about?
Gavino Free(roosterteeth): what you on about?