What does the bee's knees mean?

It means something along the lines of "very good, Excellent, great, amazing" and coined circa 1920 as a flapper idiom. Back then they used this expression because a bee's baskets for pollen are located near its knees, so when the bee's baskets are full of pollen, they are filled with "the good stuff" of that oh-so sweet taste of honey that most of us love.