It means to be perfectly correct. "You were spot on with your guess." You can also use "Your guess was spot on" or "you were spot on". "Her work is always spot on" means what she does at work is always exactly what is needed. I think Ramsha was thinking of "to be caught red-handed", which has nothing to do with being spot on. If you're caught red-handed, it means you are in the middle of committing the crime when you are discovered.

To be exactly correct. Eg: "What's the capital of England?" "I think it's London." "Spot on!"

to caught a red hand