1) To mull over in one's mind indefinitely without taking any sort of action. It is normally applied to difficult situations, when the moral or correct choice is obscured or nonexistent.
2) To hang out
1) Bob: Man, I don't know what to do about this...
Steve: Just chill on it, man.
2) Joe: What do y'all want to do?
Sam: Let's just chill on it.
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