saifkazi:
In short you are telling me to convert that pwm signal from flow sensor to logic voltage which is done by lpf ?

Well, kind of - but I get the feeling you've got the order of operations incorrect

I should really start studying about different types of signal and their conversion.

Yes, do this.
Read up on PWM, basic low pass filters (first order, cap and resistor 'RC' type, don't let the math scare you, just look at the plots and get an intuitive understanding of what a low pass filter does to a 'sharp' signal), analog to digital conversion, thresholding/comparator operations, Schmidt triggers and also the difference between *internal* logic (that for the intents and purposes of discussion are only logic 'states') and *external* logic signals (that actually use voltage to represent them).
Thats a lot of reading.
Someone might have a better/easier way to do this, but I *still* suggest all that reading will serve you well, it is basic stuff that you'll need to get your head around if you want to work with more interesting projects...