"Touché" derives from the French language, and originally was used in fencing (with swords). The word literally means "touched" as in when you touch, or land a light hit on (but still successfully "touch") your opponent with your sword.
In this context, it means 'good point', but good point in the context of a reply (for "touché" is always used in the context of a response) that adds a slight bite, or edge, to what has already been said, or makes a good, or clever, point that may be uncomfortable to have to acknowledge, and/or is at your expense, and when you comment "touché", you have (often ruefully) acknowledged this.