Product market fit, or Service Market fit (yes I'm a Service Design nerd) is when your idea not only is great and working, but that it has found the people it serves, and that these people are using it repeatedly and pay for it. There is a fit between what you want to offer to people and what they truely want.
Jeroen Coelen created a pretty nice scale with different tests you can make to see if your idea has really potential or not.
The more your tests are on the right side of the map, the more chances there are that your product or service idea is actually something that people are not only interested in, but something that people pay for and use on the long term.