It's basically saying "Dont't worry about it." To use it in a sentense: "I know you burned the dinner tonight, but don't fret about it."

Fret = worry Do not worry

ok..thanks...I found it in a videogame....never heard it before neither.. Bye!!

don't fret is like "don't worry" or "it's okay" Personally, I don't hear it said a lot, unless you're watching the show Family Matters hah