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  The dog days of summer originate with the constellation Big Dog which has the brightest star, Sirius, in the nighttime sky from July 3 to August 11.  It's the time of the summer when the days hold the greatest heat. It's also been observed that dogs, perhaps animals in general, will gather together on hot days and lay unmoving in the shade during high heat. ( source )

Originally this term was used only in military circles to mean field exercises. But it morphed over time to mean hilarity and fun as well. Read about its origins here . 

The literal use of this phrase hails from 1838 when the phrase originally was "call it half a day" to mean leaving work early. (source) The modern use of the phrase is to indicate ending something due to false sense of accomplishment.