Having a lack of confidence in ones own abilities.
Don't sell yourself short. You are a good dancer.
Comes from short selling of stocks. To sell a stock short is to sell shares that you don't own. These shares must be bought at a future time to complete the transaction. Selling short is used when investors believe the price of the stock is going down, and they wish to profit from that drop in price. They can sell a stock at today's price in anticipation of acquiring the stock at a lower future price.
Selling a stock short is a bet that the value of the stock is going down. Hence selling yourself short is an expectation that you are on the decline.