This comes from old times when pots and pans were generally black and kettles were generally metallic and reflective. Therefore the pot sees its black reflection in the kettle and thinks that the kettle is black.
*this can also sometimes be shortened to "pot, kettle, black."*
Some other guy: Well thats the pot calling the kettle black!
Joe accuses Mark for not keeping his house clean when in reality, Joe has a messy house. Therefore, Joe is guilty of "the pot calling the kettle black".
Pot-smoking bystander: Hey, man. Make peace not war, man.
Kettle: Well, if that isn't the pot calling the kettle black?
UrbanDictionary.com reader: WTF?!! THIS DEFINITION SUCKS BALLS!