If you tell someone to "knock yourself out", it means "do it". For example:

A: Can I try it?

B: Yeah, knock yourself out.

One way to use this phrase is to tell someone to do something that you actually don't think is a good idea. For example, imagine that you're selling something. A customer thinks that she can find a better price somewhere else. You don't think she can. So you can say:

If you think you can find a better price elsewhere, knock yourself out.