For example: "I had a great idea for a new sport,until somebody burst my bubble".
It means that the person with the idea,thought etc. experiances a realisation influenced by a second party,that the idea,thought etc CANNOT and WILL NOT work.
So if you have a great idea etc and you dont think it through,your bubble will be burst.
It can be used in other contexts,this is only an example
It means to shatter someone's preconceived notion, to point out the flaw in their idealism.
Some examples: New employee: "I'm so glad I got this job! I'm going to work very hard and do extra tasks so that I can get promoted into a management position soon." Veteran employee: "I hate to burst your bubble, but I've worked here for 12 years and have had excellent performance reviews and I still haven't been recommended for management. You have to be related to the owner's family to get anywhere in this company."
Fred: "I just loved Jane Smith on Dancing with the Stars and it's not fair that she was eliminated from the competition so early. She was wonderfully talented!" John:"I hate to burst your bubble, but these so-called reality TV shows are not about reality at all. They're scripted in advance, so Jane would have been eliminated no matter how well she performed."