If we speak about person, this expression means that he/she is very entertaining, somebody with who have great time. We can use it like this: X is the bomb (X is the name of the person we are refering to).
Instead, in case of things, this expression refers to unexpected ones, something which make a lot of noise, something explosive, for this reason the word ‘bomb’ is used. When the news is a bomb means it lead to a polemic or has a big impact, something which doesn’t go unnoticed.