Well yes, its true
Technically it doesn't grow but the fat around your pubic region(mound) decreases and makes your penis look bigger.
A large part of your urethra, that forms penis, is inside your body. It brings out secretions from your prostate and cowper's glands etc. Try to trace in when it is erect and you will know.
Consider this: You have a 10inch long stick buried in the ground with only 4inches sticking out. If you dig the ground around the stick, you can make 6inches stick out. But of course, there is a limit to which you can dig up by losing fat. If you want more, you gotta slice your own body(not technically possible unless you are dead).