My mother and your mother were hanging out clothes.
My mother punched your mother right in the nose.
What colour was the blood?
Children's counting rhyme used to select the person who was 'it' for a game of tag, hide-and-go-seek, or other such activity. Participants stood in a circle, with one child repeating the rhyme. Each new word in the song would result in the speaker pointing to the next person in the circle. The one exception to this is hanging, with a different child being pointed to for each syllable.
Upon reaching the word blood, the child selected would call out a colour, and the speaker would spell it out. Whoever happened to be pointed at when the spelling was finished was 'it'
Unlike eenie meenie miny mo and one potato, two potato, which could have numerous variations depending on who was speaking it, this rhyme was preferred in my childhood due to the unchanging nature of the verse, as well as the pseudo-randomness caused by the colour given. Besides, what boy can resist the imagery of two mothers duking it out? A word of advice though, 6 year-olds don't know how to spell fuchsia.
smartalix mentions that he's heard it with the final line being "How many drops come out?". This variation requires the child being pointed to to give a number, which is then counted to.