Yang Xiu is eating the famous cake that gives his ability its name. You can even see the words 一合酥 on the box!
Who is he:
Famed to be one of the most brilliant advisers to Cao Cao 曹操, Yang Xiu was either a genius or a lunatic. Going by his track-record of excellent advice and superior logic, he was mostly trusted, even respected, by Cao Cao. On the other hand, Yang Xiu has a nasty habit of thinking way too far and conjuring up dramatic assumptions for harmless incidents. He was the ancient equivalent of a conspiracy-theorist, and that ultimately cost him his life. Learn from the ancients, don't be too smart for your own good.
Character ability 1: Have your Cake (and eat it) 啖酪 (dàn lào)
When you are targeted by a tool card that also affects other players, you can immediately draw a card. If you do so, that tool card has no effect on you.
Character ability 2: The Wishing Bone 鸡肋 (jī lèi)
Whenever you receive damage, you can voice out a card type (basic cards, tool cards or equipment cards). The player that caused you damage can no longer use, play, or discard any on-hand cards of that type until the end of that round.
Ability's relation to story:
You probably heard the phrase "have your cake and eat it too", but a literal version of this scenario actually happened to Yang Xiu. A nomadic tribe sent a box of cakes to Cao Cao as a gift. Cao Cao wrote on the box the words "一合酥" (a box of cake). Upon seeing this, Yang Xiu grabbed a spoon and shared the cake with all of Cao Cao's followers. A puzzled Cao Cao asked for an explanation, to which Yang Xiu replied, "You wrote the words "one mouthful for every person", dare I not obey?" The answer lies in breaking up the words "一合" (a box) into its constituent parts "一人一口" (a mouthful per person). Cao Cao probably gave him the WTF-look. He wasn't happy that his cake was eaten. The mechanics of this ability seems to create that benefit of "eating your cake" by allowing you to draw a card, but it does miss out on the danger to himself that occurred in the story.
"The Wishing Bone" is another famous incident. Cao Cao was contemplating a retreat after his general Xiahou Yuan 夏侯渊 was defeated by Huang Zhong 黄忠. He could not decide if it was better to stay and fight or to withdraw, and it weighed heavily on his mind. He repeatedly muttered the words "chicken bones" as he drank his chicken soup, probably not referring to anything specific. Yang Xiu got wind of the words "chicken bones" and told all the generals to prepare for a retreat. "Chicken bones are tasteless if eaten, but its a pity to discard them as they are useful for soup. He is signalling that advance is futile, and a retreat is imminent. Prepare to retreat, lest there be panic when the order is given." Boy was Cao Cao pissed when he heard that troop morale was dampened by the smart-aleck Yang Xiu!
So what's the relation of "The Wishing Bone" to the story? Not much. It seems more like a defensive mechanism while the story shows that incident was anything but defensive!
Additional info based on story:
1. Most famous achievement - Pulling stories and reasoning out of thin air. The two stories listed above are but two incidents. There are others as well, some completely illogical (or logical, depending on your perspective) but all very creative.
2. Cause of death - Executed by Cao Cao. Seriously, he outsmarted himself. The signal for retreat in the "Wishing Bone" story was a military breach of conduct, and people have been executed for much less. Cao Cao bit the bullet and executed Yang Xiu. After Yang Xiu's death, Cao Cao did not retreat but instead advanced on the enemy. It was a horrible defeat, and Cao Cao regretted not listening to Yang Xiu after all.