The phrase means that rather than sticking to a defined plan, you will see how things go and decide on a course of action. This saying has its origins in music, as “playing something by ear” means to play music without reference to the notes on a page. This sense of the phrase dates back to the 16th century, but the present use only came into being in mid-20th century America, primarily referring to sports. These days, the expression has lost its focus on sports and can be used in any context.