From the description of him in this excerpt, we can infer that Brom Bones is a generally good-natured guy. He likes to tease ("more mischief than ill-will"), but he can go too far, probably without even realizing it ("overbearing roughness"). You might call him a "gentle giant"--someone who looks like he could crush you with a hug, but who really wouldn't hurt a fly. The fact that he has a "strong dash of good humor" is what leads us to conclude at the end of the story that the headless horseman was another of Brom's pranks.
"He was ready for either a fight or a frolic; but had more mischief than ill-will in his composition; and, with all his overbearing roughness, there was a strong dash of waggish good humor at bottom."
Brom Bones is a big brute, a bully, and he's pretty popular. Ichabod cannot stand him because Brom is the man standing in his way of winning the heart, estate, and good food of Katrina. This passage is saying that Brom is always ready to fight, but that that he's generally playful "ready for either fight or a frolic". Brom's physical description would suggest that this is very true. He's extremely masculine. He is a big man with a big presence. He really fills a room and people are drawn to him.
"He has more mischief than ill-will in composition" means that he is more playful when he bullies rather than mean. He just likes to poke fun but he is not malicious about it he just wants to be funny.
"With all his overbearing roughness, there was a strong dash of waggish good humor at the bottom," means that he is brutish, perhaps even a little rude at times, probably not very well mannered and proper, like Ichabod, but that he is funny and has good humor about who he is.