Originally a nickname given to British sailors who sailed across the Atlantic and sucked on
limes to keep
scurvy away.
It is now often used by Americans in two scenarios
1.) When referring to a
British person, possibly in a form of endearment.
2.) Referring to 'British stereotype' (usually in an insulting way) but the insult is not specifically reserved for the British.
Ex:
"Met a limey at the airport today."
Person 1: The people
down south are so uneducated.
Person 2: Oh shut it, you're starting to sound like a limey.
"Met a
British person today who was acting like a real limey."
Person 1: Here's a picture of me before I got braces.
Person 2: Oh wow, you look just like a limey!
Person 1: I prefer tea over coffee.
Person 2: Oh no, you're turning into a limey.
"You
limeys are too polite!"