The interviewer initially expected from you to explain things like field catalog, condition tables, access sequences, pricing procedures, condition types, VOFM routines etc. Instead you gave him an answer, which is not that ("By using Item category"), so he wanted to understand if you were referring to a very narrow case, related to pricing (as Kıvanç correctly pointed out) and, maybe, give you a chance to improve your statement.
It looks like the interview did not go very well for you. Go back to your sandbox, practice at least 4 hours/day, read again the documentation, read some discussions in the SD space and try to answer them (even if you don't post), so that next time you can ace the interview.