To move yourself (or something) over in order to make room.
Here's an example of correct skootch usage:
You enter a diner. Seeing three of your friends sitting at a booth two on one side, one opposite you walk over to them. The one friend sitting by himself is sitting on the "outside" of the booth that is, the portion of the bench farthest from the wall.
You might say to him/her:
"Hey, skootch on over so I can have a seat."
The word also lends itself to inanimate objects such as in the following scenario using the same setup as above:
"Hey Nickels, skootch you bag over, make some room."
While in Glendalough, Ireland I used this phrase (which I thought was pretty universal) with a table full of people. (As this was during the Fiddle Festival it was quite packed so seats were scarce)
"Hi there," I said to the man on the end, "can I skootch you guys over a bit so I can sit down?"
No one at the table had ever heard the phrase. A couple of them thought I was requesting a smooch.