The word derives from the two words
1) fluff - something fluffy, full of air, soft, harmless, like whipped cream (an illusion of volume).
2) nut - slang for a human testicle
A fluffnut is a person who tries to show, that he/she has "balls" (courage, is macho etc.), but in fact is the exact opposite: a wuss, a chicken, a fake
"Come here and fight me you pathetic lille bastard, I'll knock your socks off! Oh yeah, that's right, so come here!"
...after which the person playing tough actually goes and hides, runs off or does any similar action, effectively the same effect as the Peter and The Wolf fairy tale. This all to odds that are very much in his/her favor, making the situation really embarrasing.
So, a fluffnut is someone blowing hot air in a stupidly loud manner, showing the exact opposite resolve upon re-action.
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