Casual smalltalk or gossip.
This is just a reduplication of chat, which is itself a diminutive form of chatter, which has been with us as both a noun and a verb since the 13th century. The two-way, conversational nature of chit-chat is alluded to in the 'to and fro' sound of the term, as in tick-tock and see-saw.
It is recorded in two separate citations from 1710. Firstly, in Samuel Palmer's Moral essays on some of the most curious English, Scotch, and foreign proverbs:
"'Tis the custom of foolish people ... in their chit chat to be always biting people's reputation behind their back."
Secondly, in a piece by Sir Richard Steele, in edition 197 of The Tatler:
"If Ralph had Learning added to the common Chit-Chat of the Town."
See other reduplicated phrases.