This expression can be used in an informal social or professional situation, usually when discussing competition, or a physical or verbal altercation. It is associated not just with defeat, but with humiliation, and is likely to cause offence. The idea that you could 'wipe the floor' with somebody implies that you have beaten or defeated them so completely that you could do whatever you wanted with them. It is also commonly used when bragging about a victory. This is a casual expression used in social contexts.