Shakespearean term for a man with a short penis. Esp. applied to the stereotypical 'underendowed idiot', who acts stupid in order to trivialise (& hence come to terms with) his embarassing sex organ. The term alludes to the psychological tendency of short-penised (& indeed short-statured) men to become jokers & jesters of the moment. Humour serves as a convenient cover to gloss over their shortcomings.
Further, such males often exploit self-deprecating small penis jokes in order pre-empt harsher criticism from others. Simultaneously, they typically seek to induce feelings of compassion in their listeners, esp. in members of the feminine gender.
Thus, as Paros notes, the 'pathetic prawndick' is an extremely common phenomenon: "In our world, however, it's the three-inch fool ... who clearly is the rule." ('The erotic tongue: a sexual lexicon' Lawrence Paros, Seattle: Madrona Publishers, 1984, np)
Meanwhile, Partridge observes: "three-inch fool. A short-penis'd man. `Curtis. Away, you three inch fool! I am no beast. - Grumio. Am I but three inches? why, thy horn is a foot; and so long am I at the least'. The Taming, IV i.25-27. Opposed to this slighting reference is the old folklore proverb - not to be found in the dictionaries of proverbs! - 'Short and thick Does the trick'." - 'Shakespeare's Bawdy' Eric Partridge. 4 ed. London: Routledge, 2001, p 260.
1) "three-inch fool. a Shakespearean term for a man with a short penis, as in The Taming of the Shrew (IV, 1, lines 25-27); "Curtis: Away, you three-inch fool! Grumio: Am I but three inches? Why, thy horn is a foot, & so long am I at the least." - 'The language of sex from A to Z' Robert M Goldenson & Kenneth Anderson. NY: World Almanac, 1986, p 284
2) "Of the euphemisms we uncovered for a man less favored by nature (hung like a chicken, pencil-dick & bug-fucker), we can only recommend under-endowed & three-inch fool ... " - 'Very Nice Ways to Say Very Bad Things: An Unusual Book of Euphemisms' Linda Berdoll. ill ed. Naperville, Ill.: Sourcebooks, 2007, p 15
3) "26 so ... least, ie I/my penis must be at least as long to have made you a cuckold (picking up on the three-inch insult)." - 'The Taming of the Shrew' eds Jonathan Bate, Eric Rasmussen. Basingstoke: Palgrave Macmillan, 2010, p 72
4) "Grumio may call himself a 'little pot' but he resents Curtis' mentioning his size, esp. the size of his penis; so he retaliates (1) that Curtis's horn (C;P) is only one third of a yard (penis - OED; see Foot, LLL, for the same jest); (2) that it is his horn of cuckoldry, that is the long one." - 'A Dict. of Shakespeare's Sexual Puns & Their Significance' Frankie Rubinstein. 2 ed. Basingstoke: Palgr. Macmillan, 1995, p 132
5) "THREE-INCH FOOL. TSh IV.i.23. Fool with a three-inch penis." - 'The dramatic use of bawdy in Shakespeare' Ernest A M Colman. London: Longman, 1974, p 219