I'd call it hyperbolic when someone says something that has not been proven to be real doesn't exist at all. However, I generally forgive strong language, as it is more engaging in writing than tempered speech.
It'd be more accurate to say none have been proven to exist, and if any exist, they are rare enough that the stories people tell about seeing a 'foot-long stud at the swinger's club' are wildly exaggerated or overestimated.
I think there is something that goes on in people's minds, similar to the 'halo effect' where we tend to associate other positive attributes to better-looking people, and their actions are framed in more positive lights, too. Knowing that, if someone has a sexual encounter with a person who they find hot in every other regard, then the partner's penis will also be thought of as bigger than it actually is.
So, if the guy is 6'1", muscular, good-looking, has a deep and smooth-sounding voice, and has a real 8"x5.5" cock with excellent erectile quality, his partners will say, "Oh my gaawd, this guy ______, he's huge, like really tall, like 6'3", and built! Just massive! He's got like an eleven-inch cock too!' - And the partner giving this glowing positive review actually did perceive it that big. Everything about this man was made greater than in reality in their mind.
It's hard for me to fault people for perceiving a sexy man as more impressive than reality, as it's an innate thing humans do. But, it certainly does make others believe these things aren't all that uncommon when the reality is none of 10" npb has been proven to exist.