Conventionally, cryptocurrencies like Bitcoin, Ethereum, etc, are fungible, meaning that every one unit of BTC or ETH is exactly the same as another unit and they can be exchanged for one another with no further considerations. Fungibility is one of the fundamental properties of traditional currencies too, like the USD or GBP. But in some use cases, tokens might be non-fungible, most commonly when they are used as digital proof-of-ownership of underlying assets.
For example, NFTs can be used to represent digital art: for example Bored Ape Yatch Clubs or Crypto Punks are associated with unique images of cartoon apes and pixilated images and allows owner/users to trade these punks for crypto tokens like ETH.
Another example is the tokenization of real-world assets like equity or commodities to make them tradable digitally — in this case, tokens represent unique assets and are thus non-fungible.