When I first heard this as a kid, I immediately thought about a real life camel attempting to fit through the hole for thread in a sewing needle. That seemed like a very odd comparison as to who would try to do such an odd thing?

As an adult, I heard someone talk about one of the gates in the wall to Jerusalem was named the "eye of the needle" because of its shape. If a camel was loaded up that exceeded a certain height, the camel could not fit through the gate. It was this situation that the biblical passage was supposedly referring. So as with most things, context really helped. </random_tangent>

My understanding is that it's more hyperbolic than that. There are gates around Jerusalem called "Eye of the Needle" (St Alexander Nevskys Church for instance, its supposedly the location of a 1st century city wall) and a man can barely fit through these himself.

I could be totally wrong, of course. Maybe they started naming holes in dilapidated walls that to bring tourists/pilgrims.

Did a quick google for pic examples; https://patmcinerney.wordpress.com/2014/06/30/the-church-of-...

There is no historical evidence for this, its pretty clearly apocryphal.

https://en.wikipedia.org/wiki/Eye_of_a_needle