Here are a few ways to explain it:
* Imagine you're hammering a nail into a piece of wood. If you hit the nail right in the center, you've done it perfectly. This is what the idiom means – you've understood the situation or delivered a point perfectly.
* It's like hitting the target dead center. You've achieved your goal with precision.
* You've said exactly what needed to be said, or you've understood the situation perfectly.
Examples:
* "That's a great summary of the issue! You really hit the nail on the head."
* "She hit the nail on the head when she said that we need to be more proactive."
Other expressions with a similar meaning:
* Get to the heart of the matter
* Right on the money
* Spot on
* Dead on
* Exactly right
While these explanations are helpful, the best explanation for you might depend on your individual understanding and the context in which you're using the idiom.