Green’s Dictionary of Slang

1. to realize, to work out.

1933		‘Goat’ Laven Rough Stuff 173: If any of them had ‘fluffed’ to us, they wouldn’t have hesitated to blow our heads off.
1941		G. Kersh They Die with Their Boots Clean 4: They fluffed our ammo was out.
1946		R. Grinstead They Dug a Hole 66: Why Muller doesn’t give up I don’t know. He must have fluffed by now he’s licked.

2. to understand.

1957

G. Kersh Fowlers End (2001) 110: ‘The password is generator-room—do you fluff?’ I said: ‘I fluff, Copper.’.