the literal meaning of the word is a "box for holding tinder", tinder being something combustible you use to start a fire. A tinderbox can also be a potentially dangerous situation or location.
The proper usage of the term is as an insult that sarcastically implies that somebody is 'fake tough'.
"Dang B! The Angeles NationalForest is a tinderbox during the hot, arid summer."
And dying in yo' bed many years from now, would ya be willing ta trade all da days from dis here day ta dat fo' one chance, just one chance, ta come back here as young men an' tell our enemies dat dey may take our lives but dey will never take our freedom ... YUB NUB!