My baby breath smells like vinegar. What does this indicate?

Vinegar smell. Check with his/her pediatrician for workup to rule out metabolic/endocrine abnormality, such as diabetes, especially if it runs in the family.
Diabetes? Could be a sign of a metabolic disorder such as diabetes. See your md.
See DDS\MD. There are many possibilities which require you see both a dentist and a physician to go over your complete medical and dental history, clinically examine you and determine the cause of your problem.
Stomach acid. The most likely cause of a vinegar smell is stomach acid. Babies may occasionally spit up stomach acids, especially when new foods are being introduced. If your baby smells of vinegars often then he may have gastroesophageal reflus disease, where the stomach spincter does not close completely allowing stomach acid to go back up thru the esophagus. If this happens often see the doctor.