I disagree with @maggiehm's answer: I don't see anything wrong with this phrasing.
However, the intonation does matter.
What do you mean by "X"?
This sounds totally innocuous and genuine to me.
What do you mean by X?
(So there's some emphasis on the italicized phrase, with intonation similar to sarcasm.) This would sound accusatory, and if you were writing a novel you might write it as:
"What do you mean by X?" she said as she narrowed her eyes.
However, if I know you're not from my area (e.g. you're not a native English speaker, or even if you're from somewhere that isn't my own country), I'm going to assume the former intent much more often than the latter, unless you make it really obvious that you're going for the accusatory type of sentence.