One derivation of this term comes from perception of society that people who devote large amounts of their time to lifting weights in the gym must not be very bright, due to the excessive nature of the weight-lifting activity. There is further perception that a bodybuilder or weightlifter has other serious shortcomings that result in him/her feeling the need to devote their lives to changing their body shape by rigorous exercise. Thus we call someone a meat head due to the assumption that their head is full of meat or muscle, and not brain tissue. Meathead is thus synonymous with stupid.
That guy is such a meat head.