@freeschool It's commonly used here, and not typically read as particularly condescending. A reasonable expansion might be, "Act as you see fit." It's used to politely excuse oneself from an argument than has reached impasse, without conceding on the merits.
For example, suppose Alice thinks some financial asset is likely to appreciate and advocates investing in it, while Bob thinks it is unlikely to be profitable and considers it a poor investment. They each attempt to convince the other of their respective positions, but are unsuccessful. Alice loses hope that Bob will accept her arguments, but still considers his own reasoning unpersuasive. She eventually tells Bob, "You do you," to excuse herself from the discussion instead of wasting further time as she expects no further progress to come of it. The implication is that Bob may make an unwise decision, if Alice is correct and he fails to invest profitably, but Alice will accept his choice without further attempting to influence him.
However, it might be seen as condescending or rude if a person uses it prematurely. Since he's excusing himself from the argument, it can, as you note, serve as a tactic to preempt a rebuttal and retain the last word. To imply that you have no hope of your interlocutor changing his mind but that neither can he persuade you of his correctness, before he's fully laid out his claims and responded to your own, does not suggest that you have a great deal of respect for his ability to reason and arrive at a defensible conclusion. Roughly speaking, subjects of greater importance should merit more effort to break the impasse before withdrawing from debate in this way, while more trivial ones can be ended sooner.
It's also sometimes inappropriate to use with a social superior - if you're expected to do what a particular person tells you, telling him that *he* can act as he sees fit might be construed as a declaration that *you* will not be acting as he sees fit and seen as an act of insubordination.
@khird @Sheilaniriain
Excellent. Some nails firmly hit there. Some keynotes / connected words might be:
- act as you see fit / as you like
- not wasting further time
- having the last word
- not knowing what else to say / needing some phrase to end on / indicate not much more in it for yourself
- anti-authority / go fuck yourself (to authority) although it may not be meant anywhere near as strongly it can be interpreted so - my example might be child that doesn't want more food or to honestly do orders but in such relationship there might be said / unsaid demand. Child doesn't want to disappoint or say FU to parent but also doesn't want more of something or is tired of it etc.