Because Fp is the passband frequency and Fst is the stopband frequency.
You have set your passband frequency to 0.
You cannot have a realizable "brick wall" filter. You must have some transition band between your passband frequency, which for you is 1000 (not 0!), and the stopband frequency.
d = fdesign.lowpass('Fp,Fst,Ap,Ast',1000,1200,1,80,10000);
Hd1 = design(d,'equiripple');
t = 0:1e-4:1;
x = cos(2*pi*500*t)+0.5*cos(2*pi*1000*t);
out = filter(Hd1,x);