Answering: "What do you say?"

Yes, it is a familiar, colloquial expression that is used as a substitution for "How are you?" or "How are things?" or "How's it going?" or any of dozens of possible expressions.

Like any such greeting — cf. "How's it hanging?" — it is not meant to be taken as a literal request for specific information. If you are addressed in such a manner it is usually enough simply to respond that you are fine (this can be true even if you're not fine — bland, non-committal greetings such as this should not be viewed as an invitation to go into great detail about your problems).

It's pretty much a greeting. I live in the Southern United States and a common greeting from an older gentlemen is, "What say you there, John?"

I dunno what the hell it means, I just assume it's like saying: "What's up?", so I just say: "Same shit, different day."