Feeling euphoric and well-disposed towards those around you - induced by the use of drugs, notably Ecstasy (methylenedioxymethamphetamine).
This term is British and emerged in the 1990s from the rave and dance club scenes. There is an earlier citation from 1963, but the phrase didn't become generally at that time. The first printed reference to it that I can find from the rave/clubbing period is the December 1991 issue of The Face:
"So all the lads became loved-up? No, this wasn't a cure for violence."
The phrase was used in 1995 as the title of a film, directed by Peter Cattaneo.