This quote by Polyphemus, the Cyclops, to Odysseus is classic situational irony in which the giant admits to being defeated by a mortal.

The Cyclops arrogantly underestimates his opponent.  As a giant with massive strength he naturally assumes his nemesis to be a giant with massive strength.  Goliath overestimates himself here.

The situation is an analogy, a kind of retelling of the end of the Trojan War in which Odysseus, through his cunning, burned Troy to the ground with a wooden horse.  They too expected to be defeated by a giant armed force.  Instead of a horse, Odysseus uses a little wine to disarm the giant and gouge his eye.  It's not the first time in literature that wine and blood have been used in this cause-effect fashion.

The conciliation is filled with Homeric epithets (nicknames) when Cyclops calls Odysseus "you--small, pitiful and twiggy."  It shows conflict between the mortal and immortal in which Homer, a humanist, champions mankind.

And it reflects one of the great themes in literature: blindness.  Physical blindness is always an indiction of moral blindness.   The Cyclops is being punished for hubris and living with no law.

This is a line that is spoken by the Cyclops, Polyphemus.  He says it to Odysseus after Odysseus has defeated him.  Odyssesus has gotten him drunk and put out his eye.  He has tricked him by calling himself "No Man" and by having his men leave the cave under the bellies of the sheep.   This is in Book 9.

What Polyphemus says means that he thought that he would be overcome and defeated in battle if he ever was defeated.  He thinks some giant would defeat him by force.  But instead he has been fooled by a tiny little person who could never defeat him in battle.