Separated By A Common Language Etc.

[pseudnik]

I think I'm getting reasonably good at conversing with Americans on the internet now. It comes with practice. One thing still puzzles me though. What is an appropriate response to the question 'What's up?' immediately following an exchange of greetings? I usually tend to answer this as though I had been asked 'How are you?' which seems much more natural to me and is easier to reciprocate. Does 'What's up?' literally mean 'What is happening right now in your immediate location?' or is it usually taken to encompass more general questions like 'How are you?', 'What are you up to?', 'Are you busy right now?' etc?

Am I thinking about this way too much?