It is usually OK to be inaccurate in your estimation of wave height, after all it is you who is out there, and if it a wave looks big to you it probably is big for you. But there are good reasons why you may want accuracy. For example, if you are planning to go out and check the forecast and it predicts "3 foot waves" you want to know if their 3 feet is the same as your 3 feet.
One of the things that makes it hard to estimate wave height is the fact that you are sitting down. If you are six feet tall and you see something at eye level, it is usually a good guess that it is nearly 6 feet tall as well. But sitting in a kayak your eye level is only about 2 feet above the water. All it takes is a 2 foot wave to obscure the horizon.
It is a peculiarity of perspective that anything that appears even with the horizon is at the same height as your eyes. Sit on the floor and measure the elevation of your eyes. Now, when ever you see a wave that reaches touches the horizon line, you will know it is approximately the same elevation as your eyes. You will need to look up to see the top of any wave that is higher than your measurement.
One way to calibrate your height estimation is to sit on the floor in your kitchen. Standard counter tops are about 3 feet off the floor. Notice that you probably have to look up to see the counter when you sit on the floor. If you scan up a little farther you will see the underside of the you cabinets. This is about 5 feet. Now look over at the refrigerator. Typically they are about 6 feet tall. If you are sitting in a kayak, and see something as big as a refrigerator coming at you, you would not be blamed for thinking you are about be hit by a two story building. A refrigerator looks pretty big while sitting on the floor. It is big when you are in a small boat. Typically the ceiling in most houses is about 8'. Notice how far up the wall you need to look to see the ceiling. A wave of that height has a huge amount of energy.