It's a small explosive device used by sappers (who "sap" the enemy's fortification walls) who dig a tunnel under the wall and then explode the device to cause a breach in the wall.
hoist: lift up; raise or lift somebody or something up.
be hoist with your own petard: to be the victim of your own attempt to harm somebody else
(Encarta ® World English Dictionary © & (P) 1998-2004 Microsoft Corporation)
One thing I love about the internet is the easy ability to look up words and their derivations and consequently to use them precisely as well as creatively. I like to keep the dictionary at an easy click, and I keep a dictionary of my own of words and phrases that are not easily accessible otherwise and of quotations for easy reference.
Thanks, LS and AAM, for bringing this useful concept to clarity. ~S