Roughly translates to "your promised reward is merely a fictitious motivator". Popularized by the game "Portal" (found on Half-Life 2's "Orange Box" game release for PC, X-Box 360, and PS3). During the game, an electronic voice encourages you to solve intricate puzzles using cake as a motivating perk. When you have "broken out" of the game's initial testing phase (from threat of death), you find scrawls on walls of the innards of the testing center warning you that "the cake is a lie".
Employee #1: Yo, Dave, manager says we will probably get a promotion if we meet the sales expectations for this quarter.
Employee #2: Yeah, so, don't get your hopes up on that one, Ed. The cake is a lie.
From Brooklyn Nine Nine:
Does Canada even have pizza? Vivian indignantly replies that it does: "It's puffy! And it's sweet! It's called Manitoba sauce cake!"
A diss, joke, insult, or smack talk that is particularly weak, lame, or unfunny.
After being insulted: "Your clown cake material bores me. Come up with something better before you come at me again. Maybe then I'll take you seriously."