This term refers to a man "gaining" an inch to his dick by having done something extremely badass/manly, thus becoming even more manly. Men can wear these accomplishments as a medal and brag about them at later dates.
Dude #1: "Man yesterday was crazy! I definitely gained an inch."
Dude #2: "What did you do to earn that accomplishment?"
Dude #1: "I grew a beard, threw on my plaid shirt and bibs, and went out to the forest and chopped down trees to make myself a log cabin."
Dude #2: "Damn!"