Origin:
The exact origin of the idiom is unclear, but it's likely related to the practice of awarding a cake to the winner of a competition or contest. Over time, the phrase evolved to describe something that stands out in a negative way, often because it's the most ridiculous or absurd.
Usage:
* "That's the most ridiculous excuse I've ever heard! That really takes the cake."
* "His fashion sense is so outlandish; he really takes the cake for worst-dressed."
* "The way he treated her was awful. That takes the cake for the rudest thing I've ever seen."
Essentially, it means that something is so bad, so strange, or so outrageous that it surpasses all other examples.