The yy/uu is an interrogative that turns the preceding sentence into a question, so it disappears. Literally translated, it's just:
- good?
- good, good?
- good, <...>
But the actual meaning is:
- how's it going?
- good, how 'bout you?
- fine, <...>
There's simply a few layers of simplification going on to get from the 'correct' grammar to here. Native speakers will use small differences in emphasis between the words, but I'm not nearly fluent enough for that.