This phrase is often used when talking about open positions and job applicants. If you think that a person is "a great fit" for a job, it means that you think they can do the job well.
You might get a question like this in a job interview or on an application form:
Why would you be a good fit for this position?
If the company rejects you, they might write this in an e-mail to you:
Unfortunately, we don't feel that you'd be a good fit at this time.
You can also talk about it the other way: a job can be a "great fit" for a person:
I think this job would be a great fit for you.
I was a middle school teacher for a few years, but it wasn't really a good fit for me.