The idiom "to drop the ball" means to make a mistake, to make a blunder or to fail at something. For example, if John is always dropping the ball on his projects, that means that he consistently makes mistakes.
The phrase is an American idiom that comes from ball games such as football or baseball, where dropping the ball is a mistake and can inhibit a team's ability to succeed. Also, dropping the ball in football means that play stops, so "dropping the ball" stops all momentum of the game. The phrase began being used for more general mistakes sometime around the 1950s.