Hi Chi This phrase is often used to describe how something has been given much more significance than it deserves. It could also be used as a way of saying "greatly exaggerated" For instance, "The risk of damage to the environment from wind farms has been blown out of all proportion"

It means something has been made a bigger issue than necessary. If something is in proportion then all sides are similar in size/weight/etc. So to be blown out of proportion means something is larger than it should be. Therefore, an issue is being made to seem way more important than it really is.

way too big