You seem to mean this dialogue from the season 9 opener:
Frasier: Niles, listen, I didn't want to say anything in front of the others, but I find myself in a bit of a quandary. Well, it's not so much a quandary, really, it's more of a pickle. Well, not so much a pickle, but well, no more than a... cornichon.
Niles: What is it?
Frasier: I think I want to be with Lana, not Claire.
Niles: Forgive me, Frasier, but that's one big-ass cornichon.
Basically, 2 things are happening here:
Frasier is trying to pretend he has a small problem, but as Niles suggests, it's actually a big one. His phrases are progressively diminutive: 'Quandary' is a difficult dilemma, 'pickle' is slang for a small predicament, and 'cornichon' is a small pickle, hence an even smaller problem.
Frasier and his brother are often portrayed as pretentious. So when they converse, they're prone to use classy words like 'quandary' (instead of 'problem') and French foodie terms like 'cornichon' (The Crane brothers love French, gourmet food, and French gourmet food). This tendency is then humoristically undercut when Niles uncharacteristically says 'big-ass'.