When you are not totally satisfied with something but you don't want the other person to feel bad, so you just say "close enough" and drop it.
Nick: Hey dudes, blaze it.
John: But it's 4:21, we're a minute late.
Nick: Oh. well, now it's 4:22, so it's 4:20 too!
John: Umm... Well... Close enough.
It is said of the situation where a person has the bad luck to make contact with his testicles against an undefined surface or object, intentioned or not.
Given the nature of the word, it is more appropriate to design cases where the interaction is made with a moving object, for example, a ball.
Although it is extremely painful for the victim, it tends to be considerably funny to people who witness it.
Today in the baseball game the pitcher took a nutshot; the baseball hit him in the nuts.
Man, I just watched the funniest nutshot video ever.