Often said in a sarcastic tone.
A more direct and fancy way of saying- "Don't humor yourself. You're not as witty, smart, or funny as you'd like to think."
Person 1: Hey, hey, listen to this one. Do you know how I got out of Iraq?........IRAN! (bwahahahaha)
Person 2: *rolls eyes* Your wit astounds me.
Can also be heard in the greatest female coming of age movie ever made, Now and Then.