It's a common greeting in Swahili, similar to "hello" or "good day" in English. However, it literally translates to "news," and it's a polite way to ask "What's new?" or "How are you?"
The response to "Habari?" is typically "Nzuri" (good). You can also say "Habari za asubuhi" (good morning), "Habari za mchana" (good afternoon), or "Habari za jioni" (good evening).