The Oxford English Dictionary records the expression bee's knee as meaning the type of something small or insignificant from 1797. The plural form is US slang dating from the 1920s, when there was an explosion of terms meaning 'the acme of excellence': compare the cat's whiskers/pyjamas. The first example is dated 1923. Some of these have lasted, and some have not (the flea's eyebrows, the canary's tusks).