A rather bold statement, perhaps... but let me complete what Picasso actually said: "Art is a lie that makes us realize the truth." Do you think?
I mean, first off, is art a lie? If you are considering two dimensional representational art, do you think the artist is trying to deceive you into believing it is truly the person/place/thing? I doubt anyone would think this.
Let's examine it on another level. Picasso may have been referring to the art hype lie. That, I can buy into. As an artist, the advice is never ending: how to price, how to get into galleries, which art scene matters. What is the purpose? What is the deeper meaning? Many artists feel they need to justify their "play time". Art is fun. Isn't work supposed to be drudgery to some degree? Are artists then tempted to put more importance on their "work"? I mean, we call it a "work" of art. I'm not belittling what we do. It is work. There are hard days and paintings that don't come together; but there is no denying the joy in creating.
To the second half of his statement, what truth are we meant to realize? Care to rabbit trail some more? What in fact is truth? I don't know what truth Picasso is espousing, but I do know my truth. As a Christian artist, I trust in Jesus. He says, "I am the way, the truth and the life..." If my art points others to Him, then there is purpose and meaning without the hype or self importance. When I remember this, the right galleries and I paint for Him. Soli Deo Gloria.