When somebody tells you that you are nuts, what they mean is that you are crazy. The expression is mostly used in informal contexts.
Examples: Naresh wants to invest all his savings in the stock market. The guy is nuts, I tell you. * I wouldn’t go out with that guy if I were you. My friends tell me he’s nuts.
During the middle of the 19th century, the word `nut’ began to be used to refer to an individual’s head. This was because some people thought that there was a similarity between the shape of a nut and the shape of a human head! Another similarity they found was that the nut, like the human head, was hard — and the most important thing in both cases was contained inside and not outside! Whatever be the case, the head began to be referred to as a `nut’. Around this time, the expression `off one’s head’ was frequently used to mean `out of one’s mind; crazy’. As time went by, the word `head’ was replaced by `nut’ in the expression, and very soon the word `nut’ acquired the meaning `crazy’. Anyone who was crazy was called `nuts’, and the hospital for people who had mental illness began to be called a `nut house’.