A mildly insulting way to call someone a bit daft, clueless, or not thinking it through. It’s cheeky rather than brutal, like calling your mate a muppet for a brain fade. Comes from the kids’ character Noddy, who’s famously not the sharpest tool. Great for gentle ribbing when someone says something proper silly.
"Dave rocked up to Tesco in his dressing gown, tried to pay with an Oyster card, then acted shocked when it got declined. Absolute noddy, honestly"