If you make cutoffs from jeans, the little white strings around the edges of the legs make a fringe. A fringe is a decorative edge made of hanging strings of fabric.
You know how fringe hangs on the edge of fabric and clothing? Think of this picture when you see fringe used metaphorically to mean something that is on the outer boundaries of something else. Many cities hold events called fringe festivals that celebrate art created on the fringe of the established art world. A group of people whose beliefs place them on the outskirts of a social group is called a fringe group. And beware of the lunatic fringe — they are the extremists and fanatics of a social or political movement.