In everyday conversation, "epic" is often slang for superb or excellent. The term is also applied to productions on a large or grandiose scale (novels, movies).
The modern use is a metaphorical extension of its basic meaning, a literary genre consisting of an extended verse narrative. In the Western tradition, the first great epics were Homer's Iliad and Odyssey. The term is also applied to similar narratives in other traditions -- for example, the Indian Mahabharata. Even in literary criticism, one sometimes finds it used for works which do not strictly qualify -- for example, Walt Whitman's "Song of Myself."
Non-literary uses like "epic movie" or "epic event" are common in advertising and occasionally appear even in formal prose.