It means that somebody has achieved / created / done something that exceeds the - already very high - expectations of the commenter.
"You do great things all the time, but this is even better!"
Imagine you have a friend who regularly paints the most amazing paintings, a really skillful artist. One day you enter his gallery and notice he just painted the GREATEST painting of all times.
This is a situation where you'd tell your friend: "Oh my god, you've outdone yourself!!"