Ounce means a small amount / a little bit.
Pound is of greater weightage than an ounce.
Discretion means caution, prudence or good judgement.
Wit means intelligence or cleverness; it can also refer to humorousness.
The proverb 'An ounce of discretion is worth a pound of wit' means it is better to be cautious rather than smart as being smart could be more unwise than being discrete.
1. Shalini decided not to tell Mala about Sharad's true nature right away as she felt an ounce of discretion was worth a pound of wit.
2. Peter wondered whether to report to the class teacher about the bully, but decided that an ounce of discretion was worth a pound of wit as he did not wish to portray himself as a tattle-tale.
3. If one sees a street fight, it is better not to get involved for one's own safety, as an ounce of discretion is worth a pound of wit.