It means to have what you're doing suddenly and unexpectedly stopped. Imagine if you were standing on a rug working on a project, if someone pulled the rug out from under you, your work would stop and everything around you would stop. The full quote is 'Pulled the rug out from under me.' Eg. 'They pulled the rug out when they cancelled the delivery of the blocks.' 'I had the rug pulled out from under me when Jim didn't finish his part when he said he would.' I hope that helps

Here is an example of how I heard this phrase used a few days ago! I have a little niece who is not quite two years old. She climbs a lot. The other day we turned around and saw that she had climbed up into a chair and onto the table and was attempting to climb higher onto the kitchen counter. My mom said to my dad "You should pull the rug out from under that." .. what my mom meant when she said this was ... you should stop the baby from climbing higher.. she did not mean to literally pull a rug.