You should be flattered is an excuse used for sexist incidents, in particular for sexualized environments or harassment incidents, in which commentary on women's appearance (usually) is defended as being complimentary to the women.
This excuse is problematic because:
- it attempts to dictate women's emotional responses to them
- it reminds women that they are subject to men's approval
- it reminds women who aren't the object of the comment that they are also subject to men's approval
- it ignores the fact that many women have had negative experiences with sexual attention, such as immediate or eventual criticism or violence, and therefore do not view it with unmixed (or any) pleasure