My understanding is: You should not look down on yourself for what others look down on you. Instead, you should turn this into your strengths. To use the little devil's own example, being a dwarf is what makes others look down on him. When others laugh at him for being a dwarf, he is relieved because this is an unchangeable fact. Since it cannot be changed, use it rationally. The little devil can't dance a sword like his brother Jaime and become a knight, but he can read and gain knowledge, so he "armed himself", and it turns out that he is one of the wisest people in the Lannister family and even in the book.