It means 'How good is your English?' or 'How well can you speak/understand English?' You can give all the usual answers such as 'Basic' 'Not very good', 'Not bad', 'OK', 'Fairly fluent' and so on. Two typical answers which native speakers often give when asked about their ability in other languages are these: 'I can get by' meaning that I can make myself understood and say what I need to say in most everyday situations. and 'A bit rusty' meaning that I haven't used it much recently so I don't speak it as well as I used to.

Not bad