Michael and Anthony explained the meaning very well. You might also be interested in the origin. When fox hunters train dogs to find and follow foxes, they don't want the dogs to follow other animals instead. So, they will drag a dead fox on the ground, and then they will drag a dead red herring (which has a very strong smell) in another direction. If the dog follows the smell of the fox, they reward it, but if they follow the smell of the herring, which smells stronger and is more attractive, they punish the dog.