Pierce gave Lance Armstrong the lowdown on the whole controversy in the latest episode of the hit Fox celebrity competition show, "Stars on Mars" ... and he downplayed the whole incident -- even though he lost his TV gig over it.

The Truth explained he was playing poker at his friend's birthday party ... and there was "a lot of alcohol" involved.

"It was a big whole controversy," the Hall of Famer told Lance. "I mean it wasn't nothing illegal, but it was just girls ... girls shaking their ass."

Lance somehow knew nothing about the controversy ... so when he asked how the video even saw the light of day, Paul had to admit it was all his doing.

"I accidentally did, my dumb ass."

Lance hilariously scolded the hooper ... saying, "Bitch, how old are you?!"

Pierce enlisted fellow contestant Tinashe to vouch for the harmfulness of the clip ... and she said it wasn't all that bad on its own, but context had her understanding why it was such a big deal.

Of course, ESPN quickly parted ways with Pierce after the video went viral ... but he's seeing the silver lining in getting the boot, saying, "Maybe I wouldn't be on Mars if that didn't happen. See? Everything happens for a reason."