The term "potty" can have multiple meanings depending on its context.
1) In a general sense, it could refer to something that is not functioning properly or not working as intended - for example, "This machine is acting potty today."
2) It could also be used in reference to the bathroom, specifically the toilet - for instance, "I need to go potty" means I need to use the restroom.
3) In a more informal context, it can mean something that amuses or delights someone, as in "That was just too funny for words- it had me in stitches!" (i.e., it made me laugh so hard).