This engraving is based on the exploits of Italian explorer Amerigo Vespucci. The sketch and the quote are from a letter written about the "giant natives" of the island Tierra del Fuego, circa 1499-1500.
Hah, ha! It looks like the native is showing them the size of his pecker! The Italians are even looking at it, with horror it would seem! 'Ol Vespucci is so threatened by it he has his hand on his sword!