Inspired by "The secret life of Walter Mitty", a walt is a general title for someone who pretends to be someone or something they are not.
The term is mainly prevalent in the British military to refer to those who claim to have served when they haven't, or claimed to have served in an elite unit when in reality they had a more 'lowly' role. Many who have actually served take great offense at civilians claiming to have done, as the civilian has not suffered through the hardships of said service.
Operation Stolen Valor sought to crack down on fake veterans in the United States, specifically those who set out to scam the armed forces community out of money, such as Jesse Macbeth who attempted to raise money for his non-existent case of PTSD. It should not be confused with the identically named 'operation' in the United Kingdom, which instead speaks out against the use of military images to promote the British National Party. Link
Another 'group' with the catching and 'outing' of walts as a perogative is the website ARRSE, or Army Rumour Service, with 'Walt Hunting' being described as 'The Official Sport of ARRSE'.