There’s an expression:
Death by a thousand paper cuts.
One definition I have found refers to a slow, painful, demise caused by the cumulative damage of one too many seemingly minuscule problems.
Likewise, your product may not have a massive bug or a huge drawback. But it may have a thousand small little tiny issues. Like when you add a subtitle but it doesn’t trigger an auto-save unless you type something in the page content. That’s a small paper cut. By itself it doesn’t matter. It won’t kill you. Put a thousand together and the customers churn.
Thus the term paper cut in this context refers to a tiny annoyance in the product.
How many paper cuts do your users get in total every time they use your product?