Well, of course you can only stop digging after you realize you are on a hole.
This phrase is intended for people that once discover they are in an always deepening hole panic and do nothing (or worse) because they see no way to completely fix the situation.
Notable failures both personally experienced and famous usually involve great amplifications of the issue resulting from attempts to fix, often with increasingly urgent and hasty actions.
Incredibly great advice. Especially when trying to resolve an already broken situation.