"Write What You Know"

Hey all!  So there's this saying that always made me so worried, and I'm sure you've heard it.  It's "write what you know".  Why did this bother me so much?  Because I was home schooled my entire life, and I'm planning on getting my BA on an online college in which you can move at your own pace and things aren't really done in a conventional manner.  So I was worried because I would only have one story to write, mine, and mine is not really an interesting one.  Aside for the eccentric writer part, because I'd say that's fairly interesting.
Another thing is several celebrated writers can't possibly know a thing about the worlds the write, except they come out of their own head, so where does this age old statement come from?  I mean, Tolkien, with his Middle Earth, sure.  He's traveled 18 miles a day for something akin to a year (I don't remember the exact time length) to throw a deadly freedom-and-world-destroying gold ring into the only volcano that would destroy this said ring and flies away on giant eagles just before being consumed by lava.  He was also only 3 feet tall.  At least, the story goes something like that.  (All of that about Tolkien was sarcasm, in case you didn't catch it).  Then there's C.S. Lewis, Ray Bradbury, George Orville, William Golding, etc.  Seriously, a lot of authors don't write about what they have personally experienced.  I sure don't.
So I ask again, where did this saying come from?  And why is it still around today if authors clearly don't listen?  I was asking myself this question on the way home from a day-trip to a beach, my dog had been naughty and was now a stinky mess, and I was not happy.  So of course, I began thinking philosophical thoughts about how I didn't like taking care of my dog and being responsible.  At which point, it hit me.  All these authors DID follow this advice.  The only thing was I had got it wrong.  I had taken the advice at point blank meaning, and didn't look further.  "Write what you know" doesn't refer to events taking place, though I'm sure it can, it refers to emotions and characteristics and the way the brain works.  I had wanted to dump my dog and the responsibility of her onto somebody else (like my brother, but she has separation anxiety that makes her hard to deal with for anybody else but me and I just COULDN'T do that to her), in the same way that older siblings might want to ditch their younger siblings, then regret it later.  I knew what that felt like now.  I know what it feels like to have people want to ditch you, or at least not be around you.  I know what it feels to feel loved, and unloved.  I can write a character with people wanting to ditch her and not be around her, yet she find solace in the silence, so even though hatred, or dislike, may boil inside of her for those people who scorned her existence, she can find peace in the quiet where no one shoves her out, maybe out in nature where the birds' singing is a balm to her troubled soul.  Now I've never had it that extreme, but because of my taste of that behavior, I can successfully write a character who has experienced something much worse, of the same ilk.  Someone who has never been treated like that will perhaps have to do research or get lucky, or struggle with writing an unrealistic character.
I believe characters are the epicenter of story writing.  If you write a story, there is a very large (Probably 99) percent chance you'll be writing about something personified.  A tree living it's life becomes personified.  That being said, I believe this phrase refers not to situation per say, but to personality and characters.

So what do you think?  Do you think this applies to characters or situations?  Maybe both?  Let me know in the comments section!

Viola June HFA-DGN