"The height of foolishness" is figurative expression used by one to express strong disapproval of an act or decision carried out by another or even a cultural trend or political process. Here are some examples:
"It was the height of foolishness that Mary Jane, with a 4.0 GPA, decided to drop out of college at the last moment and join the circus."
"That world leaders would rather bicker and argue over global warming issues than take positive action is the height of foolishness."
It can also be applied to ones self: "My decision to take a road trip with no money in hopes that gas would miraculously appear in my fuel tank was the height of foolishness."
The same form of expression might also be used with other words, such as irresponsibility, ignorance, stupidity, insolence, etc.
But the expression can be used in positive ways as well:
"His decision to donate such a large sum of money to the orphanage was the height of generosity."
"The manner in which she handled the potentially embarrassing and tragic situation exemplified the very height of social grace."
So no matter what the intent, positive or negative, the expression(s) are indicative of extremes.
Edit: And as well it means the epitome of something. =)