Fundamentals are used to analyze the business itself (compared to "technicals" which relate to the stock's price).
This may include revenue, profitability, debt, growth, and a handful of other factors.
Broadly speaking, the goal of fundamental analysis is to determine the true value of a company. This type of value is subjective and there is no universal calculation.
When people talk about a stock's fundamental's "catching up" or a market returning to fundamentals, they are often referring to stocks with prices that cannot be justified.
For example, assume a company is super hot and everyone expects the business to experience rapid growth. Everyone starts buying and drives the stock price up much higher than it should be. Eventually, the stock may get a reality check and return to a price that can be justified by its fundamentals.
While there is no universal calculation for value, investors can generally agree when a stock is grossly overvalued or undervalued. For example, investors may debate about whether Apple's stock is worth $100 or $300 but most would agree that $5 is too low and $2,000 is too high. These perspectives are rooted in fundamental analysis, which helps investors better determine the value of a company.