It's a common phrase in Mandarin Chinese, used to acknowledge that you have understood something someone has said.
Here's a breakdown:
* 我 (wǒ) - I
* 听 (tīng) - to listen, to hear
* 好 (hǎo) - good, okay
* 的 (de) - a grammatical particle, here indicating that the previous word (好) applies to the whole phrase
Therefore, the entire phrase translates to "I listen good" or "I understand good," which is shortened to "I understand."