This phrase is generally used to indicate an improvement in a situation. It means that things have gotten better or more interesting. One does not need to be talking about the subject before using this phrase.
A couple has just entered their hotel room for the first time and are looking around. They open up the doors to a bureau and see a big screen TV, DVD player, and free booze. One of them says, "Now we're talking!"
by UncaYimmy July 10, 2006