1.
sure, go ahead, that's fine
Used to grant permission or express approval of someone's request or suggestion.
2.
it's okay, don't worry about it
Used to reassure someone that something is not a problem, or to decline an offer politely.
Usage
いいよ is one of the most common casual responses in Japanese. Context and tone determine whether it means "yes, go ahead" (permission) or "no, it's fine" (declining/reassuring).
When declining an offer, いいよ can be ambiguous — it might sound like acceptance. To make refusal clearer, speakers often add 大丈夫 or a hand gesture.