Number 1 is a common euphemism for urine or the act of urination. The words piss and pee are generally regarded by stupid Americans as impolite in mixed company. (I'm still unclear on the concept of a bad word.) Compare Number 2.
The expression "look out for number 1" can mean either "look out for one's own interests" (as many politicians do) or "Watch out! Don't step in that piddle puddle!"
A "number 1 hit" is the most requested song during a particular statistical sampling period. It probably got that way because of payola from a major member of the RIAA to a so-called "independent promoter."
See also: one
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