A polite way of saying "you screwed up, idiot, try it again."
A GPS says "recalculating" after you miss a turn it told you to take, then it comes up with a new route based on your current position. It doesn't call you a dumbass, it simply says "recalculating" which lets everyone in the car know you are a dumbass without it having to actually say so.
Dude #1: Have some of these great nachos I just made.
While this term is usually heard when you miss a turn and your GPS unit in your car has to "recalculate" your route to get you to the desired location.
It is also the term to describe a persons life when it does not go as planned.