That's a funny saying! But it doesn't literally apply to fish.
* Fish don't smell bad when alive: A fresh fish doesn't have a strong odor.
* Spoilage causes the smell: Bacteria break down flesh after death, faster in warm temperatures.
* The head can decompose faster: The head has more delicate tissues and can decompose quicker than the rest of the body.
So, the saying is a bit of a joke, but it does have a grain of truth in that the head of a decomposing fish will likely smell worse than the rest of the body.