actually its a phrase used to encourage you to realise something. if you are oblivious to something (dont know about something) then you can say wake up and smell the coffee!

When someone makes coffee in the morning it is usually time for everybody to get up. To someone who is a bit sleepy and doesn't want to move out of bed you might say: Wake up. Smell the coffee! Extend this image to other life situations, and you have your expression.

This is an idiom that means "get real", stop living an alusion....something in a dream world where you won't face the truth. Wake up and accept facts as they are.

"Wake up and smell the coffee" = "Look at (and accept) what is happening in front of you"! You're saying that the person is living in a dream, and not focusing on reality. "You're not going to be a famous musician! You know two guitar chords and you never practise! Wake up and smell the coffee!" "Your wife is not going to come back to you. She's left you and re-married. Wake up and smell the coffee!"

Another similar phrase in meaning is "time to face the music". Both mean to accept the unpleasant consequences of one's actions, or to confront reality.