I'm not trying to be cool by writing this analysis of rule twenty-one of “Pixar’s 22 rules of storytelling” (that aren’t really Pixar’s), I'm being my true self.
#21: You gotta identify with your situation/characters, can't just write ‘cool'. What would make YOU act that way?
This good advice is a rephrasing of rule fifteen's "If you were your character, in this situation, how would you feel? Honesty lends credibility to unbelievable situations." But with a more explicit suggestion to "put yourself in your character's shoes". So I have similar quibbles with how the phrasing could lead some readers to counterproductive conclusions.
Regarding the idea that all your characters be identifiable and answer the questions about their actions based on how you'd act, I refer back to my analysis of rule fifteen: You actually have to imagine how your character would feel based on the core personality traits and goals you’ve given that character, not just try to find actions for them you find empathetic (unless, of course, that’s who that character is).
What you most need to do is understand your characters and situations. Not just in a mechanical, "I did a lot of research" sense, but in an emotional sense. Some characters are your own proper avatars, and you identify with them completely. Others are fantasy extensions of a part of yourself, or something you wish you were. Those sorts of characters are natural to identify with. Still others are cautionary tale, pathetic versions of yourself, or something you fear you could become. Those are easy to empathize with.
But if those are the only characters you write, you'll eventually end up in a rut. Of course you always want to "write what you know" by playing to your "core thematic" -- the kinds of stories you are naturally inclined to tell -- but you want to vary things by setting them in unfamiliar situations populated by characters that aren't necessarily all just some modified version of yourself.
With those characters it's not so much a matter of identifying or even empathizing with them, but rather with understanding who they are and creating believable scenes based on how that character would act. That includes creating situations that make sense for that character to have gotten into, and ways out that draw upon that specific character's strengths and flaws, goals and needs.
What constitutes an inappropriate situation may also not be obvious. It may seem that a soldier forced to dance ballet is inappropriate, but that may be exactly what that particular soldier needs to do in his character arc. Merely incongruous situations aren't necessarily wrong.
Situations that aren't identifiable or appropriate for a given characters are ones that are emotionally dishonest for who that character is at the moment the situation occurs. The moment in the arc when the situation occurs is a crucial consideration, since the whole point of character drama is to put a protagonist through some sort of ordeal that changes them (or they "die trying" in a tragedy).
Many scenes that feel wrong come from placing what might otherwise be an appropriate moment in the wrong place along the arc. For example, a narcissist acting in a self-deprecating manner. If your character arc has on her way to being "humble yet still self-confident" then that may very well happen near the low point. If it happens at other time in the story, it will feel wrong.
Audiences identify with situations when they can believe that the characters who are in the scene would be in that given predicament at that point in time. It's a matter of constantly tracking not only your plot, but also your character arc as it relates to your thematic question, and making sure they reconcile.
Finally, there is the matter of "don't write cool". This doesn't mean you can never have a character that is a hipster or a hep cat (depending on your time period).
Rather, it is referring to the mistake of writing vapid characters in an attempt to meet a surface expectation of what an exciting character is. In other words, trying to get your audience to say "wow, that guy is cool!" rather than really feeling for the character.
Cool characters are ones who are emotionally dishonest by virtue of being straight stereotypes rather than specific people designed around archetypes.
Mediocre action movies often have this problem in the form of the ultra-capable hero whose only flaw is his regret that he couldn't save all the good guys the last time he was called to duty. But the romantic comedy stereotype of the super-competent ice queen who just needs the right man to melt her heart is just as much a lazy, "cool" character.
You have to strive to create characters and situations that are both "cool" in the entertainment value sense (as determined by your genre) and emotionally honest, and therefore compelling and interesting (even if not necessarily empathetic and identifiable).