“That is typical of you” is exactly what “You would!” means in this context. It is listed in some dictionaries, though it can be a little hard to find among the many other meanings of would; for example Cambridge lists it as
would modal verb (FREQUENCY)
(…) disapproving used to suggest that what happens is expected because it is typical, especially of a person's behaviour:
"Madeleine called to say she's too busy to come." "She would - she always has an excuse."
This is closely related to the meaning explained just above: would can express something habitual. For example
He would always turn and wave at the end of the street.
means the same thing as “He always turned and waved …” but the use of would stresses the fact that it's a habit.
As for what you read in Urban Dictionary — don't mistake UD for a useful reference. A lot of what it contains is just what one person decided to add and doesn't mean that anybody else would understand. I, for one (admittedly not a native English speaker), have no idea what why “you would” is supposed to be annoying or this “I did forget”/“but really” business is supposed to mean (maybe it implies that “you would” was used sarcastically?).
It's supposed to be funny.
It implies
I can't deal with people today.
I personally didn't find it funny because this structure
I can't [noun]
seems cliche to me.
It is supposed to invoke something like this
It's akin to
I can't even
if you are familiar with that expression.
I felt like I should probably note that the structure (using nouns as verbs) can change meaning. It isn't fixed. But it is usually used to be funny. For example,
I can't math today.
It could mean I can't do/comprehend/tolerate/teach math, all depending on context.
Today, before I went to class, I saw this post. I was exhausted and I really didn't plan anything for class. So I was thinking, I can't math today.
In other words, I can't teach math today. (I wasn't trying to be funny; that's how I felt. But it could be used by someone else to be funny, like if they really hated math.)
Here is an instance of to [noun]. The speaker is talking about the abundance of tutorials in the game Pokemon LeafGreen
You get a tutorial battle where you are told how to play Pokemon.
And then there is an old man later on who tells you how to Pokemon.
In this instance, we infer that "to Pokemon" means "to play [the game] Pokemon [LeafGreen]". He's trying to be funny/cutesy. He gets a couple of smiles, but no one really laughs out loud.
Best Answer
Usually, if you don't know the meaning of a sentence, I would recommend a good dictionary, like Merriam–Webster's, or dictionary.com. There is an alternative dictionary, called "Urban Dictionary" where all of the definitions come from online users, and so it tends to get a lot of rude and slang words. In this case, this site has a great definition for whacking-off:
So your boss was rudely saying that what you were being unproductive instead of working, as if you were masturbating at work. Although to be fair, masturbating at work is far worse than merely unproductive, so in this case it's probably a lot closer to saying you were slacking off, which just means not working as hard as you should be (it even rhymes!).
The appropriate response probably depends on whether or not you're offended by this remark. If you're not offended by his rough language, the appropriate response is probably to work harder. If you are, that might be a better question on the workplace.se than here.