It’s a common expression. There are implied words that are unspoken:
‘How’s [your perception of] everything [that is going on in your own life that you consider important enough to talk about with me, given where we are, what we have talked about in the past, how much time you have to talk, how much time you perceive that I have to talk with you about yourself at this time. The preferred default answer should be, “Fine” “Great” or something similar. If you say “Horrible”, “Awful” or something similar, then I will likely roll my eyes and dig my heels in and get ready to listen, or I shall find a convenient excuse to escape, because you did not follow the unspoken rules above, unless I am entertained by misery or by ‘people stories’ in general, in which case I shall settle back comfortably and enjoy listening to your troubles. If you follow “Fine” or “Great” with a story or two, my behavior will be the same, the only changes being if I enjoy positiveness rather than misery, and I would enjoy listening to your successes.
Generally though, “How’s Everything?” should be followed by “Great!” and then we move on to the next topic of discussion, or we nod our heads and move on with our separate days. That is the default answer that is most preferred in polite society]
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