The shaka sign is made by extending the pinky and thumb while curling the other fingers into the palm. It signifies "aloha" or "hello", but it can also express "thank you," "good luck," "goodbye," "cool," "everything's alright," "hang loose," and many other positive sentiments.
While there are various stories about the origin of the shaka sign, it's generally believed to have been developed by a Hawaiian man named "Kaiana" who lost his fingers in a work accident and used his remaining thumb and pinky to greet people.