What does "with a bit of stretching" mean?

This is a play on words.. "Stretching the truth" is a common saying. It's like a fish tale. A person who catches a guppy might make it sound like he landed a shark. It's not necessarily a lie, but the storyteller will often make a insignificant detail a grander thing or action.
So, whatever this stuff is, it could almost be considered a living thing. It's kind of god like. Taking something that is definitely not alive and making it live or reproduce or replicate like a living creature.

Cool