The phrase “crouching tiger, hidden dragon” is a Cheng Yu, or Chinese idiom. A Cheng Yu is typically comprised of 4 characters and refers to a larger story that has a lesson or moral associated with it, much like the Western phrase “sour grapes” refers to Aesop’s fable of The Fox and the Grapes. As for what “crouching tiger, hidden dragon” means, a message board posting reveals the answer:
“The phrase ‘Crouching Tiger Hidden Dragon’ (Wuo hu zhan long) is a chinese idiom in which the words ‘Tiger’ and ‘Dragon’ directly refer to people with special hidden talents. This idiom is used to remind people to never underestimate anybody.”
Much thanks to Ted for the info.