Sometimes an online argument gets so heated that the most fitting response isn't a counterargument at all — it's a suggestion to step away from the screen entirely. Touch grass captures exactly that dismissive suggestion.
What this phrase actually means
This phrase tells someone to go outside and disconnect from the internet, typically aimed at someone taking an online argument or opinion far more seriously than the situation genuinely warrants — a literal suggestion to touch actual grass instead of continuing to argue online.
Why grass specifically became the reference
Grass represents the outside, real world in the most literal, simple way possible, making the phrase an easy, almost absurdly straightforward way to suggest someone needs a break from their screen and a return to ordinary life.
When someone typically gets told this
This phrase is most often used when someone is being excessively combative, dramatic, or overly invested in a minor online disagreement, implying that their intense reaction reflects too much time spent online rather than perspective from the real world. 
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A dismissive insult, mostly
This phrase is typically used as a dismissive insult rather than genuine advice, functioning more as a way to end an argument by questioning the other person's perspective than as sincere concern for their wellbeing.
Sometimes used more lightly among friends
While most commonly dismissive, this phrase can occasionally be used more lightly between friends without real hostility, jokingly suggesting someone's been a little too invested in something online rather than genuinely insulting them.
Related to being chronically online
This phrase is closely related to another internet-culture criticism, similar to how what does chronically online mean describes a related but broader concern about a perspective shaped too heavily by internet spaces.
Conclusion
Touch grass captures a blunt, dismissive way of suggesting someone step back from an online argument. For more slang and internet culture phrases explained clearly, browse SoundGIFs' full News section.