In this specific instance where it is being asserted that "everything in the universe is either a potato or not a potato", it is incorrect as there are more variables than merely the potatoness of an object. There are animals, fruits, vegetables, other starches, and even among potatoes varieties of different potatoes. To state that there is only one absolute quality that truly matters is ludicrous. What is more likely the argument to be made is that of sin or evil or good or some sort of variety, which is a large array of absolute qualities. Something that is an absolute quality can be broken down into a simple yes or no. The human comprehension of absolute qualities is incredibly shallow. Take our understanding of color: what makes yellow yellow? There are many different ways to get to something that is, as far as we can comprehend, yellow. But what is absolutely yellow? There cannot be a singular, perfect, absolute quality that is yellow as the concept is too broad in scope, it is too relative. Yellow is a relative quality, comprised of an array of variable absolute qualities.
What's really happening is that there is a misconception or intentional misconstruing of this concept on either yours or the person who asserts this part. As far as I'm aware, this is an ancient argument. I know that Plato asserts that everything, like say a cup or a chair, has a "perfect form" that exists in the superior realm of ideas and the variations we see are just flawed recreations of the inferior realm of reality, and that Aristotle critcized him for it, but I'm by no means educated on the subject.