That means you either are a woman or a guy with a normal/big dick, and outside of offering sympathy or support you don't have much to really contribute to the conversation.

It's one of the first things that a woman will go for when trying to hurt your feelings. I broke it off with my girlfriend because the distance was getting to be too much, and suddenly she was glad that I left her because my pencil dick would never have satisfied her anyway, her ex was much bigger, blah blah blah. Granted, there's not nearly as much sting to it when I was the one dumping her, but the fact remains that it's the go-to for women trying to hurt ex lovers' feelings or reputations.