In voice procedure (the techniques used to facilitate spoken communication over two-way radios) a station may request a report on the quality and strength of signal they are broadcasting. In the military of the NATO countries, and other organizations, the signal quality is reported on two scales; the first is for signal strength, and the second for signal clarity. Both these scales range from one to five, where one is the worst and five is the best. The listening station reports these numbers separated with the word "by". Five by five therefore means a signal that has excellent strength and perfect clarity ? the most understandable signal possible.
Five by five by extension has come to mean "I understand you perfectly" in situations other than radio communication, the way Loud and Clear entered slang, post-WW2.
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"I read you 5 by 5" is radio lingo meaning "I hear you loud and clear." The term comes from the system of ranking signal strength and clarity on a scale of 1 to 5. Saying "5 by 5" indicates the highest level of both.