The word is from the domain of transactions and resolutions to transactions that don't turn out perfectly.
When the parties in a dispute settle, they accept less than what they wanted at the outset. The parties may feel that the lesser thing is better than nothing, which is the risk if they insist on everything they wanted but everything they wanted is simply not available.
The contract called for 10,000 widgets per month, but the supplier could only produce 7,500. We settled for the 7500 in return for guarantees that the price would not increase for two years.
The word is used in a figurative or extended sense in many contexts.
I wanted Vanilla Pecan Crunch ice-cream but they had none left. So I settled for plain vanilla.
The direct flights from New York to Denver were all sold out so I settled for a flight that required me to change planes in Chicago.
In the context of romantic liaisons and marriage, to settle is to accept the other person as your fate, despite the fact that they lack something or some quality you wanted.
She had hoped to marry a rich man and live an exciting cosmopolitan life but settled for a man who owned a little shop in a provincial town.