I've usually heard this expression to mean that a situation is clear and there is no way of miscontruing it.

"your fired!" is a pretty cut and dried sentence.

That said though, I admit that I haven't heard that expression in a coons age (good example of a sentence that is definitely not cut and dried )

Oh, and "pretty" is almost always added in front of it when you are verbalizing that something *is cut and dried.