It means your teacher is exaggerating a little. Not as much as you might think, though.
Bach is valuable as a teaching resource (leaving aside his merits as a composer per se) because he teaches:
1) complete "independence of the fingers", which means an ability to control the fingers to achieve individual touch and volume of notes regardless of what your other fingers are doing.
2) an ability to handle works where there are multiple competing "tunes", not just a single harmonised melody. At first it is an ability to recognise such cases, then an ability to play them after analysis, and ultimately an ability to hear and think about multiple lines at once. This is not particularly prevalent in strictly classical music, but is vital for the romantics repertoire and later.
3) He's pretty damn good at teaching rhythm and feeling the pulse of a piece.
Of course, all of these can be learnt elsewhere, but the combination in Bach is especially effective and, often being written with a teaching purpose in mind, somewhat tailor made for the purpose.
I should also stress, it's some great music, too.