its almost similiar to lame..
for example.
the guy you see at the gym with the mc hammer pants and the fag bag around his waist = tool
but also
the kid at the gym in the abercrombie jump suit with the matchign wrist bands, and head band = tool
it has many applications..it could be someone who is full of themself and thinks they are the shit but are a total jackass or it could just be a fuckin dork.