Together, the characters literally mean “improperly (using an) yú to fill the number.” This paints a direct picture of the story from which the idiom originates.
The story behind 滥竽充数 is one of the most famous in China, originating from the ancient text Han Feizi. It tells of a lord named King Xuan of Qi (齐宣王), who loved listening to the yú (竽) instrument, but only when played by a massive orchestra of 300 musicians. A man named Nanguo (南郭先生) couldn't play a single note, but he saw an opportunity. He joined the orchestra and, whenever they performed, simply held the instrument and mimed playing along. Because the group was so large, no one noticed, and he collected his salary like a real musician. Years later, King Xuan died and his son, King Min, took the throne. King Min also loved the yú, but he preferred solo performances. He ordered the musicians to play for him one by one. Knowing he would be exposed, Mr. Nanguo packed his bags and fled overnight.
This idiom is very much alive in modern Mandarin and is used in various situations, from formal critiques to casual self-deprecation.
Its connotation is generally negative when describing others but becomes neutral or humble when used for oneself. It is suitable for both formal and informal contexts.