Definition of a 3 way situation
A 3 way situation is generally referred to when you are on the flop on the turn or river and 3 players are still in the hand. A 3 way pot is a pot that is contested by 3 players. Generally, flops are played heads-up in shorthanded cash games (the most popular games where 6 players are at the same table). If your friend describes a hand he played, it will be important for him to specify that he played his hand 3 way if that is the case, since the hand will not play the same way.
Situating a 3 way pot and implications
Let's take the following example. A player opens on the button when all players have folded before him. The small and big blind call the bet. The flop falls A-K-J with 2 spades. The two blinds fold and the player on the button bets. Both blinds call the bet. The turn is a queen of spades. The player in the small blind bets, the player in the big blind raises and the player on the button with AK in his hand wonders about his options. He may tell his friends, "I had a good hand, but we were 3 way, so it was harder to play."
Note that poker players are generally more honest in 3 way situations.