1. It is a British, American and Australian catch phrase meaning to have enough proof to show that someone has done something wrong.
2. To be caught red-handed, in the very act of committing a crime or error. It implies that there is no possible way for a person to explain away their mistake or crime.
I was driving way above the speed limit and the police radar caught me dead to rights.
In Britain the term "Bang to Rights" is often used to mean the same thing.