Onomatopoeia: 呱呱 mimics the loud quacking of ducks or croaking of frogs (often used in folk-art performance to signal applause-worthy quality). The phrase started as performance-criticism slang — 'so good the audience quacks/cheers' — and slid into general use meaning 'excellent.'
register
Colloquial and slightly old-fashioned/folksy — you'll hear it from older speakers, in dialect-flavored speech, and in northeastern China especially. Standard equivalents: 一流 (yīliú), 顶呱呱 (dǐngguāguā, even more emphatic).
