When a person, usually male, walks around carrying more swagger than their body is intended to hold. The most common form of this occurs in sports, when someone constantly surrounds themselves with great athletes and is basically along for the ride to a championship - causing them to believe they were the sole reason their team won.
No one knows why, but great athletes continue to accept the invitation to join his team. The offender of this misdemeanor crime can be easily spotted. His team will be winning, and he will be 5 times slower than the rest of the competition. He will also be the only person talking shit, despite being the worst player on the court/field/etc...
This would be equivalent to Luc Longley talking shit and walking with a limp because Jordan, Pippen, and company won him multiple championships.
This phrase originated in North Central Ohio... but has spread like a wildfire across the country due to the constant desire for losers to be seen as winners.
Andrew: "Is that guy really good? He's walking around like he owns this gym, but he looks like a tool"
Eric: "No, he's got a severe case of unwarranted swag. He was officially diagnosed last year, but is in denial."