Context:
The phrase evolved from its original meaning
of genuine shock / amazement into a
versatile catch-all reaction that can range
from sincere surprise to ironic detachment.
"X is crazy" typically maintains more
sincerity in describing something as extreme
or absurd, but it can also be used to mock
something mundane (reflecting Gen-Z's
tendency toward exaggerated language).
"That's crazy" has become particularly
notorious as the perfect filler response
when someone hasn't been paying attention,
essentially functioning as a polite but
hollow acknowledgement. The dismissive
usage gained traction through internet memes
like "That's crazy, but I don't remember
asking," which explicitly (and usually
humorously) weaponized the phrase as a way
to shut down unwanted stories.