You (and Drax) have both misunderstood.

The line is

"Mantis, why don’t you just touch him and, you know, make him happy?"

Groot responds

"I am Groot?"

to which the other characters say things like "Dude!" and "Gross!", so clearly what he said was inappropriately sexual.

The 'that' in "meant that" is referring to touching Peter's gentleman parts.

You (and Drax) have both misunderstood.

The line is

"Mantis, why don’t you just touch him and, you know, make him happy?"

Groot responds

"I am Groot?"

to which the other characters say things like "Dude!" and "Gross!", so clearly what he said was inappropriately sexual.

The 'that' in "meant that" is referring to touching Peter's gentleman parts.