Hi Hellen,
I like your question - English can be so confusing sometimes, I know.
Typically, "hanging out" means one is socializing with friends or family. In other words, it means one is not working at that moment. It's a very colloquial (slang) way of saying you are 'relaxing'.
Alternatively, it could mean to 'hang out' washing, for example. In other words, putting the washing out to dry using pegs and washing line. Mostly, this form of the word 'hanging' means to dangle or to suspend something, like, for example, clothing
Remember, though, Hellen - it's usage depends very much on the context it which you place it.
I hope this helps - keep hanging in there ;)