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The phrase refers to the so-called "Dual Monarchy" of Austria-Hungary: The Emperor of Austria was, in personal union, also the King of Hungary, and hence, as all government acts were performed in the name of "His Imperial and Royal Majesty", most of the time abbreviated with "k. u. k.". Also, all governmental institutions and offices had a name prefixed with "k. u. k.".
The ubiquitiousness of this phrase in all administrative matters made it a synonym for the Dual Monarchy, which is even today often referred to as "the k. u. k. monarchy".
Arising from the term "k.u.k." is the name "Kakania", which is sometimes used to describe the Empire as a state of mind, bureaucratic and with a very stratified formal society.
Kaiserlich und Königlich