Blame yourself for the misunderstanding, then improve it
I am assuming here that you are the student who is the writer of the dissertation. If not, my advice applies to the student working on the dissertation.
You should treat this situation the same way you would treat an analogous situation when referees in peer review misunderstand some aspect of your work (see this related answer). That is, whenever you receive academic feedback involving a "misunderstanding" of your work, you should blame yourself for failing to make things clear, and then revise accordingly.
The issue here isn't really whether or not "previous work" refers to your previous work or the literature in general. Personally, I would interpret this term in the same way you did, so I would agree here with your interpretation. That really doesn't matter. What matters is that a reviewer misunderstood what you were trying to say because what you wrote wasn't clear to them. Take this as a shortcoming of your work and revise accordingly --- i.e., revise your discussion to make it crystal clear that you are referring to the literature in general and not just your own previous work.
As a secondary matter, it is useful to distinguish between issues that matter and minor issues that have little impact on your work. This appears to fall into the latter camp. Even if you think the other person is completely wrong, assess the importance (or lack thereof) of the issue and pick your battles.