Fluency has many meanings for different people. I just want to say however we make many mistakes naturally in our own native language. We stutter, forget words, pause with 'uhhs', and use wrong grammar sometimes even on purpose with slang. I personally feel fluency is a feeling of ease with speaking the language, and being able to communicate yourself without difficulty. Perfection is a misconception. Even the average English speaker only knows about 94% of the available English vocabulary that is out there.

Fluency means you could live in a country where the language is spoken and be able to communicate with the people there without any problems.

Good question. I think fluency is very relative. I noticed upon logging in today that italki advertises "fluency in 3 months", which I think is virtually impossible. The words for fluency in French and Spanish remind me of a flowing stream of water, which I think is a good metaphor for fluency. Continuous, variable, and difficult to define or measure.

According to me 1) Just like you can speak Chinese (Mandarin) without any problem it's means you are fluent. 2) Any language if we can speak without any problem it's called fluency.