This would logically be used in a conversation about the weather.
Jo: Hey, they say there will be sunshine tomorrow.
Riley: Really?
Jo: Yeah, liquid sunshine. Bring your Seattle tuxedo and rain boots.
Riley: Man, I hate you.
“Liquid Sunshine” is used by Seattleites of all ages, although not every single person you meet will know it. Have a bit of caution when you use it out-of-context, because it can also refer to other kinds of weather (for example, a mix of sunshine and rain), LSD, or tea.
This narrator with a charming accent, who is attending an Avatar conference, comments on the wet weather, calling it “Seattle sunshine” (In the description of the video it says “It was a damp start with liquid sunshine Seattle style”).