From what I looked up it means something like dude or mate. It's also used when expressing suprise? If native speaker has better insight I'd appreciate it.
The English "Yo" is a really good translation. You can use it to express surprise ("Alter! Wtf!" - "Yo! Wtf!") or to address someone ("Alter, was geht?" - "Yo, whats up?").
"Yo" really is the best translation I can think of.
It is one way to do so, german youth also use several english terms or "Digga" which is a modified form of the word "Dicker" meaning fat. Although I am no linguist I would assume that Alter and Dicker were used in combination with Freund (friend) first since those are valid phrases that still are in use.