Use this phrase in the following situation:

1. Someone uses a word to describe something. (For example, "Our father is pretty frugal.")
2. You disagree with that description. 
3. You want to replace that word with something else.

For example:

A: His art is... interesting.

B: Ha! Ridiculous is more like it!

People usually use this expression to replace a positive word with a negative one. But you can also use it in the opposite way:

He said it was "nice", but "amazing" is more like it, if you ask me.