Literally, it means:
- 그게 무슨 [강아지(가) 풀(을) 뜯어먹는 소리]야(?) = What is that [(sound/story of) a puppy eating grass] you're talking about?
But it is rally an expression meaning what the other person said is ridiculous, or can never happen. Dogs never eat grass no matter how hungry they are, so "a dog eating grass" is a colorful way to say that something is nonsense.