It is often used to give more information and clarify, so to make the meaning clear. An extended version of it could be : "by which I mean"
For example:
He is slow, as in he's not as fast as his brother.
I like tea, as in I drink it every day.
Democracy, as in the running of the country in which everyone has a vote.
A: Do you like chocolate?
B: Like...as in?
A: As in love.
B: Yeah, sure, I love chocolate!