I asked around and got an answer that "It's fine by me" is more in the direction of "I am going to allow/accept it", and this is not what the Polish sentence says. The Polish sentence would be used for example if your children asked you whether their maths homework is done well, and you look at their notebooks and everything seems to be correct. Or the dough for the cake seems alright. Or the room is already clean enough for the arrival of the guests. So it's more of "I think it's okay".
"To jest" and "To" could both be used in a sentence like "[It/This/That] is Y". Although not always "To" itself will sound naturally.
In this sentence, it's a bit different, the 'it' is more of a dummy pronoun, not referring to anything specific. That's why 'jest' can work without any subject. But I'd say it's not the most common situation.