It is a french word that we have borrowed from the sport of fencing. It is often used to acknowledge when someone has made a good point in an argument or discussion, especially if it proves your point of view to be incorrect.

Touché is an interjection used for admitting that someone has said something better, funnier, or cleverer in answer to what you or someone else has just said. Example: Person A: I have just read Fifty Shades of Gray Person B: Since you're 50 and grey you'd know all about it, wouldn't you? Person A: Touché !