This phenomenon is confusing enough for boys who've grown up with that anatomy their whole lives. But if you have Pinocchio's understanding of the universe, there's only one conclusion to draw: His lengthening penis is revealing a lie on his part ("But it happens even when I don't speak ... maybe just thinking a lie is enough?"), or some other equally dishonorable behavior his own body is trying to shame him out of.
So, imagine what he will feel when he sees that special girl (or guy -- Pinocchio's sexuality is never explored) for the first time and gets hard. He'll automatically assume he's gone wrong somehow -- are the mere urges a sin, even if not acted upon? Whatever it is, he dare not tell anyone! Society would surely shun him forever.
Walt Disney Studios
Which is pretty much how real puberty works, come to think about it ...
After months or years of this, he'll become repressed and bitter, growing to hate his fleshy body that sometimes throws out the sin indicator for no good reason. He'll wake up some mornings and wonder what shameful thing he must have done or thought in his sleep. Lifelong bitterness and self-loathing seem like the best case scenario, with the alternatives being self-castration or a career as a serial killer.