What does 'Wag the dog' mean?

To 'wag the dog' means to purposely divert attention from what would otherwise be of greater importance, to something else of lesser significance. By doing so, the lesser-significant event is catapulted into the limelight, drowning proper attention to what was originally the more important issue.
The expression comes from the saying that 'a dog is smarter than its tail', but if the tail were smarter, then the tail would 'wag the dog'. The expression 'wag the dog' was elaborately used as theme of the movie. 'Wag the Dog', a 1997 film starring Robert de Niro and Dustin Hoffman, produced and directed by Barry Levinson.