Banquo speaks these lines immediately after he and Macbeth have been confronted by the Weird Sisters. They have received their respective prophecies, that Macbeth will become Thane of Cawdor and then king, and that Banquo will father a line of kings. However, when Macbeth attempts to ask how it is that the Sisters know this information or why they've shared it, the witches simply, and inexplicably, vanish (according to stage direction). When Banquo says that the earth has bubbles like water has bubbles, he means just that: that there are bubbles in the earth just as there are bubbles in the water, and he believes that the Weird Sisters have come from one of these bubbles. Otherwise, how could they know about earthly doings and yet be capable of vanishing before their eyes? It helps to show how confused the men are, as well as Banquo's early suspicions of the Sisters and their motives. While Macbeth seems to wholeheartedly believe everything he's heard, Banquo is more circumspect, wondering if they've "eaten on the insane root" and hallucinated the encounter (1.3.87).