Act one step at a time. React as needed without premeditation. This phrase suggests that decisions must be made as circumstances require and one can not pre-plan for the outcome. Playing the board game of chess is a good example, you don’t know what moves your opponent will make so you must decide your actions one move at a time. It would make more sense if it were ‘play by eye’ for what you see, but I guess ‘by ear’ implies what you hear decides your actions.

 “We’ve never traveled there before and have no specific plans, but I’m sure it will be fun and we’ll just play it by ear as we go.”