"Rocks" as in "rock 'n' roll"! An extended version of the phrase is "Rock the Casbah" (from The Clash song). "Last night's party totally rocked the Casbah." (=last night's party was super!!) Rock on!

there are many meanings of that words actually. "tony hawks win in the competition cause he rocks the whole game" cowboy...

You're able to say "That rocks" if you want to tell about fun, enjoyable event or about something cool. For example: Our trip to Las Vegas rocked. Have you ever heard Andy plays a guitar? He rocks!

I guess it's something like "that's cool!".