Believe it or not, people who think they are great at things they may not be great at isn’t just because they are imperfect and incapable of admitting themselves incompetent. It is because it is incredibly hard for us to judge our own skills without bias, as the only eyes we see through are our own.
But those same acts when viewed through more subjective eyes can see when one is incompetent or at the very least, incapable of executing whatever act they may be doing, unable to see just how incapable they just may be at it.
That sounds confusing, watch this, it is far less confusing than me trying to explain it:
See, so that one person you know who thinks they are really good at guitar but only knows one song, it isn’t their fault (mostly).
And yes, you are allowed to let him (or her) know, but do it gently. Never tear the bandage off too fast.