Write What You Know?

I have a topic for all us writers to debate:
In one film version of Little Women, Jo March says to her sister Beth, "The first rule in writing Mr. Tupman, is never write what you know!" (Emphasis mine) What has always intrigued me about that particular line, is that it is contrary to the advice authors give nowadays. The classic tip is writing these days is: "Write what you know!"
I have atheory about this dilemma: I think the script-writer in the Little Women movie decided to add that line to show Jo's immaturity in her writing, and set the stage for Proff. Bhaer later on to tell her to write from her heart.
But what do you all think? What are your interpretations of the advice: "Write what you know"? Mine are as follows:
Write, not always from your own experience, but from a similar setting to that which you live in. For instance, I have unlimited stores of creativity for family-centered stories, since I live 24-7 in a large family. It would be like having an underground lake of oil and never drilling it, if I disregarded the extreme resource such a unit is. I don't have to write about my family, or even modern times, but I understand the family unit from living in it, and I can seriously tell you that a book written by me, set in a family, would be far better than a book written by me about....spies, or something! ;) As far as things like allegories go, I would pretty much beg leave to say that the more spiritually mature a person is, the better the allegory would be. So...maybe leave the allegory idea till you are a bit older.
As far as fantasy goes.... do use a bit of your own knowledge of things to write your book. I personally have never "dabbled" in that genre, so I am not the best judge of that sort of thing! Anyway, tell me your ideas! :) -Rachel