D.O.A. (Death of Auto-Tune) The Blueprint 3 Jay Z

I don’t be in the project hallway talkin bout how I be in the projects all day

Refers to rappers who may (or may not) have grown up in the projects, but move away and only come back (usually with an army of security guards and police) to shoot music videos lying about how much time they spend there.
....Mobb Deep is of course famous for their rough, gangster rap style which no longer the style of hip-hop. Jay's point is, although he is from the Marcy Projects, he no longer needs to talk about it. On the other hand, Mobb Deep has not stopped doing so.
He don't stand around talkin s**t all day, about doin this and that, like alot of guys...he's doing bigger and better things, he's got bigger fish to fry
This particular lyric is directed at Prodigy of Mobb Deep. Who is still Rapping about how much of a gangster he still is. On Mobb Deep's 1st album "Juvenile Hell" the single that gave them street credibility was "Project Hallways". Mobb Deep is.....
Remember the next lyric in the song is: "If your a gangster then this is how you prove it to me...Just get violent". Jay is saying to Prodigy, who he has had beef with, prove your still a gangster, talking about hanging in the PJs doesn't make you tough.
I don't hang around people bragging about how tough i am
I think he means... you don't have to go around saying.. yeah I'm from the hood... If you are you are... saying ain't go make you seem tougher...