I've heard the term used for many years in the context of laying out on-screen user interfaces. It's specifically referring to how much screen area is being utilized for a certain feature or area. As in "This 2-axis positioning widget is neat but it's taking up a lot of screen real-estate we could be using to surface other features."
The term, borrowed from the real estate industry where it refers to physical land and property, describes relative display size, or available display area. A phone display has less display area (screen real estate) than a 24" monitor. Available display area constrains design decisions and content presentation.
did you know Google became famous for its search engine, where you can answer questions like this quite easily? or maybe he was talking about plans for the future, in which screens have dedicated space only available for ads.