The same four words can mean genuine contentment or playful sarcasm depending entirely on what they're captioning. Living my best life works exactly that way, flexible enough to cover both sincerity and irony.
What this phrase actually communicates
This phrase expresses contentment or enjoyment in a moment, used either sincerely to celebrate something genuinely great, or ironically to comedically overstate satisfaction with something fairly ordinary or mundane.
Two very different tones, same exact words
What makes this phrase interesting is how identical wording can carry completely opposite tones — genuine celebration in one context, playful self-deprecation in another — without ever needing to change the actual phrase itself.
How to tell sincere from ironic use
Context determines everything here — a caption on a genuinely exciting moment like a vacation or major achievement reads sincerely, while the same exact phrase applied to something mundane, like doing laundry, signals playful irony instead. 
A man in a car with a surprised look on his face says " my reaction to that information... — view on SoundGIFs
Reading the surrounding moment
The image or situation the phrase accompanies does all the actual work of establishing tone — the words alone are genuinely ambiguous until paired with whatever moment they're describing.
Why this phrase stays flexible and relevant
Its broad, adaptable wording makes it easy to apply to almost any moment, letting the surrounding context entirely determine whether the sentiment is sincere or intentionally overstated, which keeps the phrase useful across a huge range of situations.
Similar dual-tone caption phrases
This phrase sits alongside other flexible caption language capable of shifting between sincerity and irony, similar in spirit to how what does main character energy mean can describe genuine confidence or a playfully exaggerated take on an ordinary moment.
Conclusion
Living my best life stays relevant precisely because the same words can mean genuine celebration or playful irony depending on context. For more slang and caption phrases explained clearly, browse SoundGIFs' full News section.