It's a common street slang term that expresses a sense of defeat or being overwhelmed. The phrase likely originates from the idea of someone crying out "Uncle!" during a fight, which was a common way to signal surrender in childhood games.
In the book, the phrase is used several times, particularly in the fight scene between Ponyboy and the Socs. When Ponyboy is about to be beaten, he yells "Holler uncle" to signify that he gives up.
It's important to note that the phrase is not about literal surrender or giving up in every sense, but rather a way to express being overpowered or overwhelmed.