Did you know that at the moment this is the third highest ranked result for the search and that, in fact, it is the highest rated result originating from a site that deals with English usage?
All the contributors to this thread have correctly reported the correct usage of the phrase. But no one has actually explained its meaning, which was part of the original question posed. So, if I may, I would like to try to explain it.
Of all the contributions, the one from our friend with the Aliens movie series related user-name got closest to a proper explanation. The phrase
can be interpreted in one of two ways. Either
or, its intended use,
One contributor has correctly pointed out that this second interpretation is essentially the outlook of a pessimist. However, that is not the purpose of the phrase. Rather, the phrase is a means of expressing doubt in the veracity of some fact or situation. So the meaning of the phrase is that
So, to finish with an example, imagine taking part in some carnival sideshow gambling game, where the host claims he can flip a coin from your pocket ten times and each time the coin will land on heads. Of course, you take the bet because you think that the chances he has of getting ten heads in a row from flipping a true coin are very low. You hand over the coin, which against your expectations, the gambler duely wins by flipping ten heads in a row, as he claimed he would.
So, how do you explain his unlikely win? Either you accept that the gamer was extraordinarily lucky, or you come up with some other explanation. For instance, that the coin you saw being flipped was not the true coin you handed over, but a biased coin that the gamer introduced without you seeing. In other words, if it seems too good to be true, it probably is(n't true).