It's slang. Jamming out is an extreme form of dancing or moving to a song. If you see someone in their car, singing loudly and dancing, they are jamming out :)

enjoying and being engaged with something something very deeply, usually involving music (making or listening to). see: bob marley's song jammin'

This is jamming out! https://www.youtube.com/watch?v=gMy9tlMQBs4