When people say it I don’t think they’re usually trying to straight up diagnose someone with it, it’s more like pointing out that they have some traits associated with it. Even though it’s fairly rare, do keep in mind that someone could easily have at least 5 of these traits but not outwardly express them to you. Check out covert narcissism
I know a psychologist who said that when they have diagnosed people with any cluster B personality disorder, it’s usually a result of them getting in trouble w the law or when they hit rock bottom and it’s picked up through a series of tests. They are rarely self aware and it takes a very good professional to pick up on the signs. Narcissists hide these qualities very well in the beginning of a romantic/platonic relationship and usually wait till the person is extremely attached/dependent