You say something and then you realize something even better than what you have just said. You would use “better yet” to introduce what you think is even better than what you have just said.
Examples
I’ll send you an e-mail about this. Better yet, give me your phone number and I’ll call you this evening to discuss it.
We should get feedback from all the employees, better yet, let's call all of them in for a meeting and discuss it in detail.