That's What She Said

We may have been watching a little too much of The Office around here.  On two separate occasions this evening, my kids asked, "Who is 'she' when Michael says 'That's what she said'?" and "What does that even mean?"  Miriam asked first and Solomon asked second and neither of them heard the other ask the question so it's not like one of them prompted the other to think about it.  Oops.