Simply speaking, it means something is no longer in proportion i.e. or something could happen and now it's no longer in proportion (blow it out of proportion) Example: red = 5 apples yellow = 5 apples black = 5 apples green = 5 apples blue = 5 apples ....then something happened and blue received 10 more apples (this blew everything out of proportion)

'Blow' is as in 'blow up' or 'blow out'. It means that the situation will escalate. 'out of proportion' means that it won't blow up excessively - only to an appropriate level.