Seems that no one knows how this originated so let me break it down. It first appeared on the saturday morning cartoon Batman, where Batman approaches Freeze and Mr. Freeze says im chillinlike a villan, hence why he was chillin (literal definition).
Batman: Freeze what are you doing?
Mr. Freeze: chillin like a villan
Nick: Hey Josh, you gonna do some tagging tonight?
Josh: Yeah B.T.W. is gonna be sprayed on every fence within a mile of Brock!
Nick: Yeah well I'm Sway for life so I can't join you tonight, maybe you should move to Sway.