Ok guys, I figured it out!
A kind gentleman on youtube explained why the character (Jenny) says it in the movie....
Oliver (Ryan O'Neal) gets upset when Jenny tries to persuade him to take advantage of an opportunity to mend his relationship with is father and he yells at her for it.... Jenny (who has terminal cancer) runs off heartbroken.... Oliver runs after her looking for her... When he finally finds her freezing on the front steps of their house... She had forgotten her house key... He is obviously very sorry for getting upset at her and she is still sobbing but waiting for him to say something.... Then he says, "Jenny.....I... I'm sorry." ....And Jenny looks at him and tells him assuredly... "Don't. Love means never having to say you're sorry."
So I was right... She was telling him that he never needs to tell her he's sorry... (because she loves and trusts him with all her heart)
Here is the clip... (spoiler alert!)
This just make me not like the saying more. Let's just say that if this was real life and he never said sorry, I'd predict a 99% chance that the relationship wouldn't last (well if you take out the terminal cancer bit because you have to be a pretty big jerk to run out on someone who's dying). Never believe someone who says you don't need to apologize because if you never do something to acknowledge when you mess up or hurt someone else that someone else will inevitably start to feel taken advantage of and unloved. Sometimes you just need to hear it even if it doesn't really change anything.