Fungibility means that one thing can be differentiated from another. In a basic sense, drops of water are fungible. Dollars are non-fungible, because 1 dollar is not equal to another cash dollar. That other cash dollar could be from a set of marked bills stolen during a drug buy, or it could be a rare serial number making it more valuable. It's a binary state of "is this thing completely indistinguishable from another of thing of its kind"

fwiw, the person you're responding to doesn't seem to be using the word in this manner.

I don't understand how Tornado Cash (DPRK tool to evade sanctions) + Office of Foreign Assets control made Etherum non-fungible either, sounds like rambling to me