Polari is a mixture of Lingua Franca, Italian, Romany and Cockney back slang: common words pronounced as if spelled backwards. For example: 'ecaf' for face, which then became 'eek' in Polari (this gives rise to the archetypical Polali phrase: "How bona to vada your ecaf!" - "How good to see your face!").
Polari was used in London fish markets and the gay subculture in Britain in the 1950s and 1960s, becoming more widely known from its use by two camp characters, Julian and Sandy, in Round the Horne, a popular BBC radio show. It grew up primarily to disguise homosexual activity from intruders to the community (such as undercover policemen), but also because of the homosexual community's strong links with the entertainment industry (including circuses, hence the Romany link).
A great many words from polari have entered mainstream slang, such as "naff". This was brought to popular attention in the television sitcom Porridge in the 1970s, which employed it as an alternative to expletives which were not at the time considered broadcastable.
To give an example of the etymology of Polari words, many people regard 'naff' as an acronym referring to heterosexual men as "Not Available For F*****g". Through usage, it simply came to mean something which wasn't very good. Porridge expanded its use as a verb: "naff off!".
See also: Cockney rhyming slang.