This relatively modern saying has a lot of variations, but they all mean the same thing: the person being described is somewhat lacking in intelligence. It is more often used jokingly than in an attempt to be offensive; for instance, people are more likely to use it about an absent-minded or impractical friend, that about someone who has actual mental problems.
Older versions of this saying include "S/he's not the full shilling" or "only tenpence in the shilling." "He's three bricks short of a load" is still occasionally used. The German version is "She doesn't have all her cups in the cupboard."
People also sometimes convey the same idea by means of understatement, with sayings like "He's not the sharpest knife in the drawer" or "She's not the brightest star in the firmament." All versions of the saying work on the same basic idea; that you have an ideal (a full load, or whatever) that this person doesn't quite measure up to.
Older versions of this saying include "S/he's not the full shilling" or "only tenpence in the shilling." "He's three bricks short of a load" is still occasionally used. The German version is "She doesn't have all her cups in the cupboard."
People also sometimes convey the same idea by means of understatement, with sayings like "He's not the sharpest knife in the drawer" or "She's not the brightest star in the firmament." All versions of the saying work on the same basic idea; that you have an ideal (a full load, or whatever) that this person doesn't quite measure up to.