What does the joke thats what she said mean?

"That's what she said" is a humorous sexual innuendo used in response to a double entendre or a suggestive statement. The phrase implies that someone has made a comment that could be interpreted in a sexually suggestive way, and the speaker is acknowledging the double meaning. It often elicits laughter or amusement from those who recognize the sexual reference. The phrase is commonly used in casual conversations, stand-up comedy, movies, and other entertainment contexts.