It implies that you have everything else you need to complete a task, but are missing the very essential elements that would actually make it possible.
Here are a few examples:
* "We've got everything but hammer and nails for the new bookshelf. We need to run to the hardware store."
* "She brought everything but hammer and nails to the party. It was more like a potluck than a housewarming!"
The phrase emphasizes the absurdity of having all the extras but lacking the core necessities.