Use this phrase after saying something insulting, outrageous or provocative to indicate "I'm just joking," or "I don't really mean what I just said." Should be accompanied by a dismissive hand flop.
"Oh my god, there's a giant spider on your head! Ways out."
"Did you steal those pants from someone who weighs twenty pounds less than you? Ways out."
NOTE: I bag groceries in south Denver, and over the past few years I've used this "giant spider" example with dozens and dozens of customers to find out if they know what "Ways out!" means. Those who recognize the phrase are all people who (like me) graduated from a Denver area *public* high school roughly between 1975 and 1985. An outlier was a sophomore from Lincoln HS who had learned the phrase from her father -- who graduated with the Lincoln class of 1979!
Avoiding unwanted work by emphasizing one's own incompetence and/or praising someone else's greater competence.
"I would address the wedding invitations myself," said Cecile, in a dazzling display of strategic incompetence, "But my handwriting is practically illegible."