A person who readily threatens other people does not often take action. The meaning here is clear; braggarts may make the most noise but they aren’t the most effective in action.
Noisy threats often do not presage real danger; bark is contrasted with bite in a number of traditional phrases, especially one's bark is worse than one's bite. The proverb is recorded from the 16th century in English, but the idea is found in Latin in the works of the Roman historian Quintus Curtius.