A term used to indicate that someone is unbalanced and/or needs to seek medical attention for a mental disorder.
This term is a play on 'Vanity Fair', which is a very popular American magazine of culture, fashion, and politics published by Condé Nast Publication - known for interesting/controversial pictorials and cover photos (hence the the way it's used - see example).
Dave: "Did you see John last night - acting all weird? The guy is losing it!"
Bob: "Yep, I don't think we'll be seeing him on the cover of 'Sanity Fair' anytime soon."