What does "forget it" mean?

Overlook it, it's not important; you're quite mistaken. This colloquial imperative is used in a variety of ways. For example, in Thanks so much for helping—Forget it, it was nothing, it is a substitute for “don't mention it” or you're welcome; in Stop counting the change—forget it! it means “stop doing something unimportant” in You think assembling this swingset was easy—forget it! it means “it was not at all easy”; and in Forget it—you'll never understand this theorem it means that the possibility of your understanding it is hopeless. [c. 1900]