Someone who is head and shoulders above others is better than them, not because they’re tall, but because they’re just superior. Short people can be head and shoulders above other people, if they’re really good at something.
Think about tall people at a concert — they're literally head and shoulders above other people. When someone is better, not because of height, but because of another quality, you can say they're head and shoulders above the rest. As a basketball player, Michael Jordan was head and shoulders above other players, even though he was slightly below average in height (for a professional basketball player). Many believe Seinfeld was head and shoulders above other sitcoms. This is a strong term for people and things that are much, much better than the rest — at least in someone's opinion.