The teaching is a reference to people think life should be perfect, ideal. It’s about people who have a sanitized view of life. No one has problems. No family has an addict. No marriage experiences infidelity. No family has a gay or lesbian member. No person ever fails.
Additionally, the wisdom is a strong reminder not to get down on ourselves because we’ve failed, acted foolishly or even irresponsibly. That’s the time to remember life is messy. Getting it wrong from time to time is inevitable. Disappointing ourselves is inescapable. Failure is unavoidable. In those times, it’s vital that we go easy on yourselves and remember “water which is too pure has no fish."
The only ultimate state of purity in which no life issues are present is death. Dead people don't have problems any more. So whenever you experiences life’s challenges, it’s a sign you’re alive.