Fancy may bolt bran and think it flour.

Here “fancy” means imagination, and “bolt” uses an older sense of sifting. Imagination can dress up something poor until it seems substantial and valuable.

The saying warns that wishful perception may mistake thin evidence, weak work, or an inferior substitute for the real thing. It criticizes mistaken valuation or self-deception, not necessarily deliberate fraud.

Use it when enthusiasm or self-deception leads someone to overrate a meagre result, doubtful claim, or poor substitute. Its older vocabulary gives it a deliberately proverbial, literary tone.