It means neat, nice, excellent. It has nothing to do with "to spank" (e.g. to punish a child by giving them a spanking). Double-checking a dictionary--because I always do that when I am trying to understand small details of word meanings--I find that "spanking" has its own entry, "adj. 1. Informal Exceptional of its kind; remarkable. 2. Swift and vigorous: a spanking pace. 3. Brisk and fresh: a spanking breeze." In your case, the meaning is either #1 or #2 or quite possibly both. There is also "adv. Used as an intensive: a spanking clean shirt." So, to give another example of use, you might say "Wow! Look at him! He's all dressed up in a spanking new outfit!"

unique

Since I've never heard this, I'm guessing it isn't used in the US but in the UK.

Good question! It's an old fashioned word for 'completely'. One online dictionary I looked at suggests it can be used to show approval. Spanking little horse sounds odd to me. The word's most often used to say that something is 'spanking new' - where spanking just adds emphasis.