1. fail to promote your own capabilities, especially to other people
don't sell yourself short/cheap, you are better than that
When you undersell yourself, you fail to promote yourself in such a way that someone gets a strong, positive impression of your capabilities. The same applies to 'selling yourself short'. Both expressions just mean that you don't get the results you deserve, especially if you have put in a lot of work. You will hear this used in both social or professional contexts, but more so in professional contexts, especially in relation to interview performance or with someone pursuing their career goals.