Its a joke older men play on young teenage boys hitting puberty. They say masturbation makes hair grow on the palm of your hand. If the young teenager looks at his hand to see if there is any hair growing the older men know the young teenager has been masturbating and usually get a big laugh out of it.
So in the story line, Sam and Dean's hotel is within the 2 mile radius and the young anti christ kid believed that if you masturbate hair will grow on your hand.
After Dean shows Sam the hair on his hand Dean says, "Got bored, that nurse was hot," and Sam says "You know you can go blind from that too." That is another reference to the same sort of joke.
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S10|Ep12 Livin' On A Prayer
No such episode exists that matches that exact description.The only episodes that come close are the one where he's jealous of Chris' endowment, that's And the Wiener Is & the other is the short fight they get in when Chris stop Peter from bullying, and that was Tan Aquatic of Steve Zissou
Mr. Saturday KnightModel MisbehaviorDeep ThroatsPeter's Two DadsApril in Quahog- There might be more but that's all I could locate.