Literally, "That was lacking/missing to me"; in more colloquial English "I missed that" (in the sense of feeling lacking, as in "I miss you!"), or "I was lacking that" (didn't have it when I needed it).
"Mi bezonis monon por iri al Francujo. Sed tio mankis al mi." (I needed money to go to France. But that was lacking to me [I didn't have any of that].)
"Kiam mi vojagxis, mi memoris la karesojn de mia patrino. Tio mankis al mi." (When I was travelling, I remembered the caresses of my mother. That was missing to me [I missed that].)
It can mean a literal object, or something more abstract, but the basic idea is not having something, or feeling a lack of something. So "That went over my head" isn't really the idea; one would say things like "mankas al mi tempo" (I don't have time), "mankas al mi mono" (I don't have [enough] money), or "mankas al mi mia amiko" (I miss my friend). It's quite a versatile construction, and pretty cool once you get used to it :-).
Edit: the word order is flexible: "tio mankis al mi", "mankis al mi tio", "al mi tio mankis", and "al mi mankis tio" all mean the same thing; the difference is merely stylistic.