“To hit the nail on the head” means that someone says something that is perfectly correct, especially when we are discussing problems or the causes of problems. We can also say “you’ve hit the nail right on the head.”
The simplest ways to say this in plain English are:
“You’re exactly right”
Obviously, the idiom comes from carpentry (woodwork), where it is important to hit nails accurately — the head of a nail is the part that you are supposed to hit in order to drive the nail into the wood.
Tom: Our sales are low this month. Any ideas?
Jen: Well, it’s probably because our website was down for a week!
Tom: Ah, yes, you’ve hit the nail on the head.
(Note: “our website was down” means that the website was not working, which meant that the customers couldn’t buy products)