How is 还 used with adjectives?
还 is a polyphone with two pronunciations: hai2 and huan2. Your examples are using the first one.
The idea behind 还 (hai2) in these words is still; yet.

还好 = yet good = fair
还可以 = still acceptable = fair

还 (hai2) has another meaning: in addition; else, as in 还有, 还要.
The meaning backto; return mentioned in the other answer belong to the pronunciation huan2, which IMHO has nothing to do with your examples.