Green’s Dictionary of Slang

1. obscene language.

1869		Sportsman (London) 11 Nov. 2/1: Notes on News [...] [T]he New York Democrat [...] for indelicate allusion and gross language [...] appears to bo in the van of New York journalism. Yet there appears to be a thread of humour, as well as a thread of blue, pervading the columns.
2010		Codella and Bennett Alphaville (2011) 48: I’ve heard her curse out guys on the street in two languages worth of blue.

2. a ‘smutty’ anecdote, a piece of pornography.

1883		E.J. Milliken Childe Chappie’s Pilgrimage 47: All have their hobbies – Music-Halls were thine, / Childe Chappie; halls of ‘blue,’ and brazen glee.
1992		Randolph & Legman Ozark Folksongs and Folklore I 48: The authentic 1830s version is still alive in Scotland, as ‘Ye Ken Pretty Well What I Mean,’ and is sung [...] by Arthur Argo on his record A Wee Thread o’ Blue (1962), ‘blue’ in this context meaning off-color or bawdy.
2011		H. Ellison Introduction in Pulling a Train’ [ebook] Back in 1959 [this book] was lumped with ‘pornography.’ [...] Ten years later it was just silly pseudo- and updated Victorian blue.

3. an obscene or libidinous anecdote.

1889–90

Barrère & Leland Dict. of Sl., Jargon and Cant.

4. a pornographic film.

1980

T. Lewis GBH 28: [T]he merchandise, that being the Blues.