Originally used in reference to people imitating the fashion or style of cowboys. These people wore the hats, but had no experience on the ranch -- thus, all hat, no cattle. Similar to talking the talk without walking the walk (which was originally used in reference to wanabe gunslingers).
Roger says he's a great cook, but he sliced his thumb off trying to peel a potato. He's all hat, no cattle.
Description of a person that is all talk and no substance; full of big talk but lacking action; a person who canot back up his/her words; a fake; a pretender.
That guy is all hat, no cattle. Pay no attention to him.