Goku talks about Piccolo powering up. Piccolo says yea, but, compared to you, I'm nothing. Goku agrees. Trunks is shocked. Why is Trunks shocked? I think previously, it was expected that Piccolo's power was respectable. At least in Trunks eyes. For Trunks to be so shocked, I think it's a good point in saying that Piccolo is more or less around Goku, but now some of the main cast is aware of what the reader knows. That Goku at the Tower wasn't near his full power. Piccolo didn't even want to believe it either, but he had that gut feeling. So to sum it up, Piccolo's powered up to respectable levels, so much so that him being considered a weakling to Goku baffles Trunks.
Vegeta and Trunks power are only noted because of their ability to hold their own against the Cell Juniors. Piccolo is obviously getting his ass kicked, so I don't think it makes sense for Cell to speak about Piccolo's power in a positive light. It's more like, oh hey, these two actually got pretty damn strong, alright!
You can look at it as if Trunks is shocked merely by Goku's bluntness. Many people go by that. But that's not my interpretation. Piccolo is not dumb. He knows exactly how strong he is. He is a genius. Not an idiot. My interpretation displays Piccolo's genius, while yours makes him look like a goofball. These guys know the writing on the wall, knowing Piccolo, there's layers to his comments. That's what I see.
I won't even waste my breath too much explaining power ups because they are mostly plot, but the way I think about it is, Piccolo's hit a whole new level of potential now that he's merged with Kami. Much like how Nail's merging with Piccolo allowed him to reach Super Saiyan heights, Kami's merger allows him to hit wildly new heights.
Also, with Kami's genius, Piccolo is able to reach nearly his max potential. I think Piccolo is already at the lion's share of power he will ever hold for the rest of his life, manga wise at least.