Simply put, this individual is Dumb; a living, breathing idiot with no ability to comprehend sarcasm or social cues. This term can also apply to ones attitude, cuss word replacement, or reference a social group setting. The White Person version of "a la verga!" (In Spanish). Can also be referred to as a classic Mexican Style Beef stew.
There's a bunch of Chile Colorado's up in here.
Did you see that Chili Colorado almost get ran over by that car?
Yes, I'll have have Chile Colorado for lunch please.