"What's up" or "wassup" is an informal way to say "How are you." in America. Young people today think that it's trendy and cool to greet people that way. I personally don't use that.

I always thought that "What's up?" means "What is happening?" or "What is wrong?" maybe "What's news?" rather then "How are you?" or "How are you doing?". And most common response is "Nothing" . Although, some people prefer to say "Fabulous","Getting by"..or whatever they prefer at the moment.

you may reply "so far, so good" (if everything has been going on very well)

I think it is a good way to start a conservation. This greeting is short and sweet. The person is essentially asking you "What are you doing?" or "What is news?" A quick reply would be "Not much, How about you?". Then both of you can go on with the conversation. If you have a bad day, you may say "Everything is down."