Usually expresses annoyance or frustration at a situation that's seen as the worst. Everyone was talking in the cinema, but the guy shouting on his phone really took the biscuit.
Pro Tip 2/3
British Usage
Predominantly used in British English, it may not be well understood by speakers of other English dialects. When she forgot to attend her own party, that really took the biscuit.
Pro Tip 3/3
Sarcasm or Irony
Often used sarcastically to highlight something that's bad or absurd. He crashed his car and then won the lottery - that takes the biscuit!