Used to describe a person (or subculture) that does everything in it's power to destroy the ambitions of those among them who wish to improve themselves.
It comes from the story of catching crabs in a bucket. When you catch a crab and place him in a bucket, the first thing he'll try to do is escape. Now, if you put two crabs in a bucket (hence the plural form of 'Crabs in a Bucket') and place them in there together, as soon as one tries to climb up out of the bucket the other will grab the escaping crab by the legs and try to escape itself, to which the process gets repeated to the point where NO crabs end up escaping.
Carl: "Isn't it a shame honey? How Johnny and Bobby are always constantly jabbing at (and insulting) eachother whenever they approach a group of girls, trying to make themselves look better than the other?"
Linda: "Exactly, they're like a bunch 'crabs in a bucket', they both end up as losers.