"what's up" means hello/how are you. It can literally mean what has been up (with you) lately! :) Young people usually just say "what's up " back. Or they say hey. Ex: freddy: what's up Tom: oh hey, what's up!

"What's up?" is just an informal greeting. It has no special significance. Respond as you please, the same as if someone had said "how are you?"

What's up is asking like what's happening. A usual reply would be something like "nothing much and you?" Unless something is happening, then you can say something like, oh nothing, i've just been helping blah blah with (whatever it is you are helping them with) or the other thing you are doing.

It is a question that has (unfortunately) replaced "Hello" or "Hi" as the most popular form of casual greeting. It's usually said in passing, so short answers can be used. For example, "Hey" or "Not much" would suffice if it looks like the person isn't going to stop to really hear your answer. But if it's obvious they're really asking you how you are/what you are doing, answer as you please.

It can be used as a casual greeting, but as a question to start a light conversation, it basically means "what's news?" If it turns up late in the conversation, it can mean concern, as SineWaves put it. For example, we've been talking and I notice you're unhappy but you haven't said why. "What's up?" I ask. It's not a phrase to use with people you don't know well. If it's not used with close friends, it sounds if as the speaker is being too familiar and presumptuous.