Rejection, basically, once someone says this to you, you're thrown into
the friend zone, this is a hard place to get out of and you know
you fucked up somewhere if this is where you end up.
Fairly good looking guy meets fairly good looking girl, a few weeks later they can't stop talking to eachother, the guy is really into her and thinks she feels the same way, he is about to say something to the girl, meanwhile the girl is thiking "great, another friend" the conversation goes like this-
guy-i've been having a great time with you lateley.
girl-me too.
(at this point the girl thinks "wow, we are so much alike", the guy is thinking "thats a good sign")
guy-i kind of have a
confession to make - i have felings for you
girl-i'm so sorry, i just see us as friends
(at this point, the girl is thinking "i see us as just friends, i'm not into you
in that way" the guy is thinking "
for fuck sake!")
so, going by that example, the guy got thrown into the friend zone because he went about getting the girl in the wrong way, now they may still be friends, but there will be tension for a long time, other typical reasons why you might hear these words are-you're ugly/have a bad personality/the person who says this isn't single.