This term is derived from the fictional pirate from Treasure Island 'Long John Silver'. It describes a gentleman equipped with a penis of staggering proportions. To be referred to in this way is a great source of pride to any man, as it implys that your dongbone has not only a great size, but a great reputation.
James: Carla why are you limping, with blood trickling down your knee? Hast thou fallen over, cripple?
Carla: No, I was fortunate enough to share a bed with George last night, he truly is Long Dong Silver!