I will now be borrowing this question as it fits well in how I interview.
What they are really asking
This question is asking. "When working with a team, from your perspective do you work well with your team or not?"
What I expect in a good response
Yes (anything but yes isn't in your best interest) followed up by supporting dialog that isn't just a canned response.
Yes, we got along well and achieved our goals as a team.
That's only "okay" it won't hurt you, but it won't help you...
Yes, most of our team was dedicated to new implementation and functionality as that's what they preferred, on the other hand I enjoy digging into old smelly code and improving it where viable. Often I worked along side others helping clean up old code they depended on so that their new implementation wouldn't get bogged down by it. This worked extremely well for allowing our projects to continue to grow and expand while preventing our code suffering the common security, performance, and maintainability problems common in applications that have been around for a long time.
That's an excellent response, you've demonstrated you were a productive member of your team who worked well with your peers, plus you just sold me on a skill I didn't even ask for yet.
Things to do
Whatever your response is you need to demonstrate you did work well with your team in a real capacity. Not just "work got done" but that you actually got work done as a collective group. You also want to demonstrate your peers benefitted from your contribution to the team as well as you benefitted from their contributions.
Things not to do
Whatever you do DO NOT bad mouth your team, management, etc. here... The moment you do you've demonstrated you're probably NOT a good team player. You also want to collectively compliment your team. Feel free to pat yourself on the back in this to better sell me on you, but not because you're "better" than them, but because you're either offering me something unique or something that's more useful to me specifically. If you go into an "I'm better" area you're going to seem arrogant which will probably reflect poorly on you as a team player.
If I ask this
If I ask this I'm almost certainly planning to have you work closely with others that may or may not be at the same skill level as you, make sure you're comfortable with that, it's also not a bad idea after I ask this to ask about the team and what you should expect. I'm trying to figure you out, and by engaging me on this you're showing you actually do care about the team situation and making sure it's in your best interest, which is in my best interest. Which makes you look better.