It means that you need to get things precisely right. There is no margin for error. A "fine line" is a thin, narrow line. You might draw it with a "fine-point pen."
The line you need to walk on is narrow. It is not wide. Bad things will happen if you step even a little bit off the "line."
I once walked along the edge of a "fin" in Arches National Park. The level part was about three feet wide. There was a thirty-foot drop on each side. I needed to "walk a fine line" or I would have fallen off.
"Fine" has more than one meaning. The most common meaning is "excellent, high quality." "Toyota makes fine cars." However, another meaning is "small." "The contract was printed in fine print." (The letters were tiny). "She has fine hairs on her arm." (You can hardly see them). "Is this coffee grinder set for a coarse grind or a fine grind? (Are the coffee grounds big or small?)