The flakiness of pastry depends upon the kind and amount of shortening used.
1570s, from flake + -y (2). Meaning "eccentric, crazy" first recorded 1959, said to be American English baseball slang, but probably from earlier druggie slang flake "cocaine" (1920s). Flake "eccentric person" is a 1968 back-formation from it.
The term 'flake' needs explanation. It's an insider's word, used throughout baseball, usually as an adjective; someone is considered 'flaky.' It does not mean anything so crude as 'crazy,' but it's well beyond 'screwball' and far off to the side of 'eccentric.' ["New York Times," April 26, 1964]