This is a phrase you’ll hear if, say, you happen to be thinking out loud about something they haven’t happened but (wishfully) could happen.
The person saying it to you probably sees them self as helping you out — get your head out of that fantasy about what could be, focus on the (usually lesser) what is. Lower your expectations to something you can reasonably do — usually something they have done, which is far as they are capable of projecting the possibilities of life.
Reality is relative — the reality you live in is quite different from the reality of your parents or your next-door neighbor or that of your favorite actress. Your reality can change quickly, and the of change doesn’t require some great thing to happen to you — your mind sets what reality is for you, and only you.
The human mind does not know the difference between fantasy and reality. If you can focus on something hard enough to really feel it, your mind doesn’t know you’re just imagining. It experiences it as if you physically did it. Enough of said experiences changes what your subconscious believes it can accomplish.
Whatever you want, is as real as you allow it to be.