You were talking about how this cat feels about your method of petting it.
"That" and "it" refers to your method ofpetting the cat.I was petting one of the cats, kind of "slapping" it on its rear end. The cat was rubbing its muzzle up against me and arching its back really high. My friend said, "don't pet him like that, you're going to hurt him". I said, "no dude, when he rubs his muzzle up against stuff and arches his back like that, it means he likes it."