I used the phrase, "It's probably for the best" recently and it seemed like poor grammar usage. Is it? What is its origin?

It's an idiom, so it's OK even if not grammatical, but 'for the best' is grammatical.
It's just short for a longer phrase that would describe what is best.
Best 'result' or 'situation' or 'ending' or 'solution' sound sort of ponderous.

You said it correctly.

As for origin, it's an idiom -- from idioms.freedictionary.com "for the best" e.g., 1) Well, I was rejected by one college, but I really like where I am now, so I guess things worked out for the best. 2) Everyone was asleep by 9, and that turned out for the best because the sun woke us at 6 the next morning.

Usage notes: often hope for the best (wish something ends well): We try to make sure we've planned for the worst, but we're hoping for the best.

I've heard it mostly at funeral homes and funerals.

It's a superlative for the word "good" --

It is good.
It is better.
It is (the) best.