When the harsh pains/experiences of life jolt you out of you dreams/fantasy .
When I was a Kid I wanted to be a Rocket Scientist, now I'm an Uber driver... Damn ,Reality bites
It's both the fact that the truth hurts/reality bites you in the ass and the fact that reality is but a farcical performance which can be interpreted by many different people to be many different things and the statement is also an allusion to the idea that we live in a simulation which is actually an ancient theory said by many in many different ways predating Rizwan Virk, Nick Bostrom, Hans Moravec, Musk🙄 and even René Descartes and predstes before we were even able to understand what a simulation could be ("A dream within a dream") it becomes a clever allegorical play on words when spoken. Less complicated to interpret when written. A mad decent 90s movie aswell.
Person - "UGH I wish my life was as easy as my Sim's life is. Or as fun as my Persona's characters is. Reality Bites/Bytes!!!"
Person 2 - "Your sim was abducted by aliens, dood. Also I think your baby is on fire. Is that a person trapped in a pool because there is no ladder out?"
Person - "EXACTLY"