For example, if you call someone an idiot, they might respond "it takes one to know one", meaning for you know that they are an idiot you have to be an idiot yourself. Or in other words only an idiot could recognise another idiot. I think that it is generally used in a negative sense, but you could also use it positively. For example, if you praise someone on their talent, they could use the phrase to return the compliment. For example only a true artist could recognise another artist.