When used idiomatically, it means to explain something in a very clear way so that it's easy to understand. To express oneself directly and clearly

Let me spell it out for you: you are not going out until you straighten up your room!

Se vuoi te lo metto in musica: non esci finché non hai sistemato camera tua!

I tried to make you understand in every way I possibly could. Do I really have to spell it out? I never ever want to see you again!

Ho cercato di fartelo capire in cento modi. Te lo devo dire in musica? Non voglio vederti mai più!

The original meaning of spelling out a word is to pronounce it one letter at a time, which could be very useful for names, acronyms, codes and so on.
If you spell out a word, the person who's listening can understand it better.