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The phrase "something is fishy" is an idiom, which is a non-literal way of saying something. Usually, when a person says something is fishy, he means that thing or situation is strange or isn't as it seems. For example, if an individual gets a feeling that someone is trying to deceive him in some way, he may state that something is fishy. In such a case, this phrase is not meant to be taken literally, as there are no fish involved. Instead, people who hear it usually know the phrase is a colorful way of saying that something isn't right.
When a person feels that something is off or just isn't right, there are many different ways he could choose to express this feeling. In many cases, however, a person will choose to use a common idiom to express his thoughts. A person may say that something is fishy when he means that something is strange, wrong, suspicious, doubtful, or off.
It can sometimes help to consider some examples when one is trying to understand want idioms such as "something is fishy" mean. For instance, consider a parent who believes his daughter has been studying at the library every afternoon after school. If he one day notices that her book bag is in her room when it should be with her at the library, he may state that something is fishy. This basically just means that he believes the presence of her book bag is suspicious and he wonders whether she is really at the library.
An employer may also state that something is fishy if he notices a pattern of bookkeeping-related errors. For instance, if an employer notices that an employee is often paid for overtime that he did not authorize or that someone seems to have a pattern of receiving duplicate paychecks, he may consider this fishy. He may follow his feeling that something is wrong with an investigation into the errors that have given him cause for concern.
While idioms are commonly used in casual speech, it is important to note that they are not generally acceptable in formal speech or writing. People most often use them when speaking with friends and acquaintances and sometimes in emails. Additionally, it is important to keep in mind that using idioms may cause confusion when one is talking to people from other countries in which the phrases are not common.