If a criticism or description applies to you, then you should accept it as true. When something said about people in general applies specifically to your situation, acknowledge it.
This phrase evolved from the older saying 'if the cap fits, wear it,' which dates to the 18th century. The 'shoe' version became popular in America in the 19th century, possibly influenced by the Cinderella fairy tale where the shoe fitting proved identity. Both versions mean accepting applicable criticism or descriptions.
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