The development height and settlement prediction of water-conducting fracture zones caused by coal seam mining play an important role in the stability of overburden aquifers and the safety of roadways. Based on the engineering geological data of the J60 borehole in the Daliuta Coal Mine and the mining conditions of the 2−2 coal seam, China, this study established a similar material test model of mining overburden. The deformation characteristics of overlying strata in the mining process of coal seam were studied by using distributed optical fiber sensing technology, and the development height of water flowing fractured zone was determined. According to the equidistant sampling characteristics of Brillouin optical time domain reflection technology and the principle of the grey theory model, the settlement prediction model of the water-conducting fracture zone was established. By analyzing and comparing the prediction accuracy of the GM (1, 1) model, grey progressive model, and metabolic model, the optimal method for settlement prediction of the water-conducting fracture zone was discussed. The results show that, for the metabolic model, with the increase in the number of test sets and the decrease in the number of prediction sets, the mean square error ratio c and the small error probability p of the prediction accuracy evaluation parameters display a downward trend. The accuracy is related to the sudden change in the settlement of the water-conducting fracture zone caused by the breaking of the key stratum of the overlying rock. The optimal time of test sets selected for the best settlement prediction model is 7~8, and that of prediction sets selected is 5~6. For the GM (1, 1) model and the grey progressive model, the prediction accuracy of mining overburden subsidence is grade 4, which is not suitable for settlement prediction of water-flowing fractured zones.