Commonly, tmi is used in North American online conversations when someone shares unpleasant private information. Perhaps the person decides to discuss their bathroom habits, their dysfunctional personal relationships, or a private medical condition. When this happens, one way to deal with the akwardness is to use "tmi!" as a polite way to tell the oversharing person to stop.
The tmi expression, like many other Internet expressions, is part of online conversation culture.
Reminder: 90% of the time, these expressions are typed in all lowercase letters. On selective occasions, you are welcome to use them in all capitals to express enthusiasm. Just remember not to type entire sentences in all caps, lest you be considered rude.
Related: 322 other common Internet expressions explained.
Related: eBay 101: The Essentials of Becoming a Successful eBayer.