Used as a drinking toast.
To your health.
Webster's New World
Origin of Skoal
Danish Norwegian skaal cup, skoal from Old Norse skāl bowl, drinking vessel skel-1 in Indo-European roots
From American Heritage Dictionary of the English Language, 5th Edition
From Nordic skål, which is used for raising a toast and also means bowl. (That there is a relation to English "skull" is urban legend.)
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