If you say that time flies, you mean that it seems to pass very quickly. Time flies when you're having fun.

What does it mean when they say time flies?

Time passes quickly, as in It's midnight already? Time flies when you're having fun, or I guess it's ten years since I last saw you—how time flies. This idiom was first recorded about 1800 but Shakespeare used a similar phrase, “the swiftest hours, as they flew,” as did Alexander Pope, “swift fly the years.”

Is it correct to say time flies?

“Time flies” is an English idiom that expresses how quickly time can pass, even if you don't realize that it's passing. The correct spelling is “time flies” and not “time flys” because of the rules about spelling verbs that end with “y.”