Habla? = Do you speak it?
Hablo. = Yes, I speak it.
Eric Yang first asked Day if he spoke Spanish ("Habla Espanol?") and then asked him again, "Do you speak it?"
He was asking this because the person they were about to meet only spoke Spanish.
By the way, it's not grammatically correct because the "it" is missing. It should have been "Lo habla?" and "Yes. Lo hablo." As it is, they're literally saying, "Do you speak?" and "Yes, I speak."