What it means
Chill is both to relax and the quality of being laid-back: let's chill tonight, he's so chill about everything. Easygoing, no drama, no stress. Telling someone to chill is asking them to calm right down.
Usage examples
"No plans, we are just going to chill at home."
"Her new boss is really chill, no pressure at all."
"We were gonna go out, but ended up just chilling and watching rubbish telly."
"She's mad chill, even when everyone's stressing for no reason."
Where it comes from
It started with the ordinary word chill, meaning cold or to cool down. By the late 20th century in English slang, it widened into relax, take it easy, and then into a whole vibe for someone who's calm, easygoing, and not making life louder than it needs to be.
Other ways to say it
This expression also appears in