In the play, Willy's repeated declarations about Biff's great talent and bright future serve to blind Biff to his true nature. Biff believes he is exceptional because Willy tells him he is.
We see this in Biff's behavior in a number of places in the play. As a boy, Biff steals a football from school. He expects no repercussions to come of this theft. We learn later that he steals from the sporting goods store where he works as a shipping clerk. Biff's sense of entitlement, pressed upon him by his father, leads him to these petty crimes.
Also, when Biff agrees to approach his former boss to ask for a loan, he is under the impression that he was once a salesman in the sporting goods store. It is not until Biff meets with the store owner that he recalls the exact circumstances of his job there and how it ended. Biff has been persuaded by Willy to believe that he was and is something and someone that he is not. Biff has been led to believe that he is better than he really is.
This realization occurs to Biff when he is standing in front of his former boss. He shares this realization with both Happy and his father, who each refuse to accept the profound truth that this realization communicates.