加油 (jiā yóu) literally means "add oil" or "add fuel" — 加 is "to add," and 油 is "oil." It comes from the image of pouring fuel into a car or feeding fuel to a fire to make it burn harder, so the phrase carries the sense of "put in more effort" or "keep going."
In everyday use it has drifted far from cars. People shout it as encouragement in almost any situation — cheering an athlete, wishing a friend luck before an exam, or telling someone to hang in there through a hard time. It works alone as an exclamation, or with a subject: 你加油! (Nǐ jiāyóu! "You can do it!"), or 加油,别放弃 (Jiāyóu, bié fàngqì — "Keep going, don't give up").
It's genuinely one of the most common encouraging phrases in Chinese, used casually among friends, on sports broadcasts, and even printed on banners at events. It's warm and informal — fine in almost any relationship, from close friends to strangers you're rooting for. There's no exact one-word English equivalent; depending on context it can translate as "go for it," "you've got this," "hang in there," or "come on!"