Fungible blockchain assets are replaceable by another identical item; they are mutually interchangeable.
Gold coins, mana gems, and resources like iron, stone, and wood are fungible . One gold coin is equal to another gold coin; one piece of iron is the same as another piece of iron. These assets are identical.
Non-fungible assets are unique, and thus not interchangeable.
A sword that you crafted and used, a spaceship you named “Rocinante,” and a level 57 are non-fungible — they are unique and cannot be interchanged. You can’t trade a Mona Lisa for a Mona Lisa.