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It means 'extremely crazy'.

Milliners (hat-makers) used to use Mercury nitrate to soften the felt that went into making the hats. Breathing mercury vapors leads to a life-threatening condition known as mercury poisoning; the damage to the brain leads to slurred speech, loss of coordination, dementia, hallucinations, and finally death.

This stereotype of the mad hatter is famously personified in Lewis Carroll's - and later, Disney's - famous character of the same name. These days, anyone who has wild mood swings and a short attention span (especially if they're also clumsy) is at risk of being labeled 'mad as a hatter'.

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Q: What does the idiom 'mad as a hatter' mean?
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