L.C.L.Y. is actually, in chinese "lan si, lan yong", which means a big lousy show-off when he/she knows when he/she can't do something within his/her capability. This word is commonly used among asians or chinese people when gossiping.
It's also used to describe someones attitude whereby it also matches his/her face and personality.
eg, there were two gals and her pals were gossiping... that david ar, so damn L.C.L.Y.. He shows off his bicycle tricks and now look at him! he landed in hospital already. It really matches his face and his personality.