I think the joke is that, as a 20th century actor (at the time), Patrick Stewart would have been familiar with method acting through his contemporaries. However, by the 24th century, method acting would have been disfavored as unnatural. It's not a reference to he himself being a method actor, and it's more of method acting being an anachronism. In another episode, Picard actually criticizes the Stanislavski method as old fashioned. Contemporary use of method acting is sometimes criticized as being corny, although many iconic and well-received performances have used it through the 21st century. It's another tool in the toolbelt, but it's not something that is frequently drawn upon in modern acting. You can't always tell someone is using method acting through their performance, either, as it refers to inner inspiration for the character, so if an actor/actress uses method acting for a particular role, it often comes out through later interviews or dialogue with the actor/actress.