"Losing it" does refer to going mad/crazy. However, it is also used to simply mean "lose your composure." For example, "I was in a meeting last week, and my boss totally lost it." This could mean (1) he became very angry (and looked a little ridiculous in front of everybody) -- in this case, the next sentence could be "Everyone just rolled their eyes." [OMG, did I just refer to "everyone" as "they"?! :-)] or (2) he became so confused that he couldn't articulate his thoughts clearly -- in this case, the next sentence could be "His assistant had to step in and explain what he meant." Slang expressions often have a variety of meanings, and as such, can be quite imprecise.

Yes, it's a very informal phrase. It means more or less 'Am I going mad?'.

Hi, I'm from England, when we say "I'm losing it", it can be a version of "I'm losing the plot" or "I'm losing my marbles", which means to go crazy (in a forgetful way). So for example, if you were having a bad day where you forgot your keys, or couldn't find something, you might say "I think I'm losing it!". However it can also mean to be angry. So if someone was being very rude to you or in an incident of road rage, you might say "I'm losing it!", meaning to lose your temper. It really depends on the context but those are the only 2 kinds of instances I can think of when you would use that phrase. Hope that helps!

This looks like American English I have watched in American films without a clear meaning of a vocabulary with one sentence.