One side of it is that David Hasselhoff is a big 80s icon. Knight Rider, Bay Watch, his singing career. It's just a funny pop culture reference.
But in the story, Peter, who's a giant 80s pop culture nerd, saw David Hasselhoff, the actor, as a father figure. Cause he is (was, meh) cool. Peter was a bastard child and latched onto the actor to emulate. Literal Daddy issues.
On top of that, the movie suggests, heavily implies that Ego the Living Planet was also David Hasselhoff while on Earth. Making it true, that Hasselhoff was Peter's father.
Ignoring that, Peter, who always saw Hasselhoff as his father figure, after realizing Yondu was his real (adoptive) father figure (cannibalism jokes aside), spoke about his younger feelings about Hasselhoff and how Yondu was just like him. It was Peter's way of calling Yondu the coolest, best father he could have hoped for.
Talking car = knight rider, Hot Women = actor's real life and tv character lives, the arrow & doing cool shit was compared to Hasselhoff's various characters,