It's usually meant as a plea to stop. When kids are holding another kid down, or somehow irritating them in a physical way, it is meant as a way to stop it all, to give up.
I surrender !!!
To give up, to say I've had enough. Tried to look up the origin but found some conflicting information which is included in the link.
www.worldwidewords.org
www.worldwidewords.org
Apparently in Roman times, many youths were sent to live with their relatives, cousins exchanging places with cousins. Therefore when a youth called for help during an attack, he would cry "uncle".