It is not impolite at all. It's very informal and common. Most people would say it to mean "Wow. That is incredible/great/terrible/etc. I can't believe it."

The meaning of the phrase could just simply change based on the tone.

For example:

"I signed up for the lottery and I won 50 million dollars!"

"No way!"

or

"Michael fell and broke his ankles while playing football and has been disqualified from the competition"

"No way."

It really just depends on the context.