This is typical of the way people really speak when they are not thinking too hard about language--for example, when they are under stress. It is not grammatical. Nevertheless, as a native speaker I find it easy to understand.
I here this as a flowing combination of two different sentences:
"Is that all you can say?"
"All you can say is 'sorry?'"
Somebody has done something terrible. They have said "Sorry." All they have said is "Sorry." The speaker is upset, because the single word "Sorry" isn't enough.
"Sorry," all by itself, is only appropriate when apologizing for a very small thing.
"Excuse me, you're standing in my way."
"Sorry." (Steps aside).
"Erase everything on the hard drive. Are you sure? [Yes] [No]"
Person A clicks "Yes."
Person B "You just erased all my work! Six years of work is gone!"
Person A: "Sorry."
Person B: "That's all you can say? 'Sorry?' All you can say is 'Sorry?'"
OR... under stress and not thinking carefully about language, Person B might "blurt" out:
"That's all you can say is 'Sorry?'"