Why the word "fine" is often used as "just satisfying" instead of "very high quality"?

Solution 1:

I heard people say, "that restaurant is fine." Does it mean "just okay", "mediocre", "at least not bad", or "top-notched" like "fine dining”?

There’s no way to tell for sure, although intonation will often provide some strong clues. For example, if I pointed out the car window and told you, “That restaurant is fine,” I probably wouldn’t say it in the same way if I meant, “top-notch, fine dining,” as I would if I meant, “sufficient or mediocre.” The former might be said more like an enthusiastic exclamation, while the latter might be said with a shrug or a resigned sigh.

Surrounding context also can reveal the intended meaning. As we walked down the street together, I can’t imagine saying, “That restaurant is fine,” without any additional information. For example, I might say:

• That restaurant is fine – I had dinner there a couple years ago. Best steak I ever had in my life!

Or, if you and I were looking for some place to eat, I might say:

• That restaurant is fine – I was hoping to find somewhere nicer, but this will do. I’m getting pretty hungry anyway.

Solution 2:

Fine has several meanings depending on context. My answer only addresses the OP's question. Not every single meaning of fine.

• That x is fine. [someone was criticizing something and another says the thing is fine, meaning; OK]

• I'm doing just fine. [that is similar to the usage above. It is often denotes an attitude: sarcasm, irony, relief etc.

• A fine restaurant = when used as an adjective, it means good or high quality.

These meanings are in most dictionaries. See definition 6 in Merriam Webster

[note: topnotch]