This is one of Don Miguel Ruiz's Four Agreements from his book of the same name, and I find it to be extremely useful for more and more reasons as I apply it in my life.
Lately, I've been focusing on this practice while listening to people talk about other people. I'm most interested in the judgments others have about their friends, family or co-workers, because it stimulates my ego to take sides. I hear that so and so is irresponsible, and it brings up for me how undesireable being irresponsible is. This is me taking what someone else says about someone else personally. I apply that judgment to the way I see myself through the lens of my value system.
By not taking personally this judgment of irresponsibility, it frees me up to realize that without irresponsibility, how could I learn about responsibility? Further, when someone judges another they are "rating" them on a good-to-bad scale compared to their value system--which is, actually, completely arbitrary. Our value systems are our comfort zones. They are decisions we've made about how we are going to be and act in the world based on painful or pleasureable experiences. Since everyone has completely different experiences, it is impossible to accurately judge whether or not they actually are some way. So, because of this, we simply judge another against our own value system.
In applying this practice of not taking things personally, it is more a practice of detachment, because the ego will automatically jump in to react to any sort of judgment or any violation or validation of its value system. The trick is to embrace that reaction and fully accept that it exists, as opposed to resisting it or going further down the rabbit hole by getting defensive and justifying why "you" responded that way. It wasn't you, it was your ego. Which is good, because without the ego, how would we learn anything about ourselves?