To describe someone who would be okay with or who has a tendency to be okay with something (an activity, etc.) that may typically not be condoned by that person's demographic
"Yo, you think I can finish my lunch in Ms. Wong's class though?'
"Oh yeah bro, she's cool with it"
To access a difficult situation in favor of the speaker; to accept the situation at hand. Usually used as an evasive or passive aggressive question when the problem being negotiated is especially awkward.
Hey if I were going to ask your sister out on a date, you'd be cool with it, right?