This phrase means that you're OK with something, or you don't mind it. For example:

I'm fine with that color.

In this example, the speaker doesn't really, really like the color. She might like another color better. But she thinks that that color is good enough.

You use "fine with" in statements:

Yes, I'm fine with that.

It's not usually used in questions. For questions, use "OK with ___":

Are you OK with this one?

The phrase "I'm fine with ___" sounds pretty positive. Another phrase with a similar meaning but a less positive feeling is:

I can live with it.