“Top notch” means excellent.
This phrase originated in the US and, eventually “the tops” came to mean the same thing. The British term is “topping.”
The earliest example may be from an advertisement in the Huron Reflector of Norwalk, Ohio, dated 29 April 1845: “J. WHYLER Has just arrived from the Great Emporium, with a Tremendous Cargo of Spring and Summer Goods, Which he is now unloading at his Old Stand in Norwalk — consisting of the choicest selections he ever made — the top notch of Fashions and Patterns — and an extensive variety of DRY GOODS, to suit his Old Customers and every other person who will give him a call.”
Oddly, the next earliest example is in a letter to the same newspaper, the Huron Reflector, in May 1845: “Now, Messrs. Editors, perhaps I have lived too long in the woods, to know exactly what makes good manners in the very top notch of society.”
We don’t know how the phrase originated. It became widely used in the later 1840s and early 1850s, suggesting that it had suddenly come into fashion.
One can assume that notches or notching played a part, and that reaching the top notch was a desirable result, but there are no clues to point us in the right direction.
The notches might be a scoring system in a game. Another idea is that it has to do with cutting notches in a log to create a primitive ladder. The phrase might come from the Wild West, when a man used to cut a notch on his belt when he killed someone. But if that is true, what did a “top” notch mean? The meanest hombre in town?
Wherever the phrase came from, it’s popular. Wikipedia tells me it’s been used for titles of songs, a pulp magazine, and a hill in Herkimer County, New York. Oh yes, and a variety of green beans.