The following story although dubious, is a nice way to remember the meaning of this curious phrase.

During the last century, the Japanese port city of Yokohama was home to a street named Hunko-dori. The sailor who could find his way to Hunko-dori could almost certainly find his way back to his ship, since Hunko-dori led directly to the waterfront. Sailors who might have drunk too much saki while ashore would come upon the street with delight and Hunko-dori became a byword for "quite satisfactory; fine."

Etymologists find this explanation a bit suspect. It's true that the term hunky-dory first appeared in print in 1866, around the time that Westerners began docking at the Yokohama port. But there's no evidence that any Hunko-dori waterfront street ever existed. Dictionary editors trace hunky-dory to hunk, a now-obsolete English dialect word meaning "home base," plus dory, a word of unknown origin