I think it depends on the circumstances. While sometimes it does mean that not everything that happened was bad, it can also mean that the person just does not want to say to you that everything was bad, even though it was.
An old acquaintance that you always wanted to date happens to come with a friend to a party at your home. You did not expect her/him. The party was terrible. The food was bad, you unintentionally insulted people, two of your other friends were drunk and abusive and one person got sick from the wine. The person you always wanted to date was obviously uncomfortable when they saw you and was even more uncomfortable after everything that happened.
Another friend says to you "Hey, it's not all bad, at least you got to see your old acquaintance.". SURE! It was all bad and seeing the old acquaintance made it worse given how the night turned out. It was truly all bad. Your friend that was trying to cheer you up could have also said "Hey, it's not that bad, at least you got to see your o,d acquaintance.". Same story!