Depends where you live, it’s somehow still alive and well in Poland! You’d usually use the lowercase xd for a more refined and low-key vibe tho, the full caps ones are reserved for special occasions.

It’s a reference to a meme that was particularly popular on Tumblr at some point, it’s called Apollo’s Gift of Prophecy Dodgeball, you can google that to see some examples. Basically when someone makes an obvious and ridiculous joke that (much) later turns out to be true, they were struck by the dodgeball of prophecy.