I believe it came from an Arab saying/proverb. It was about overloading camels but not necessarily with bales of straw. The meaning of the saying in English is that one small insignificant thing has been added to someone's burden and that the result is that the person cannot or will not function in the expected way. It is often used when a person has been made angry by another by repeated insults or lack of consideration over a period of time - one final insult or inconsiderate act (the straw) then causes the person in question to blow up.
