This charming and versatile Americanism vividly expresses a false dilemma or, taken more literally, a choice between two undesirable courses of action. It is sometimes rendered "spit, shit or go blind".
The intended meaning is normally evident from context and can be an indication of shock, fury, perplexity, ecstasy, cluelessness, incompetence, dilemma, a Catch-22 situation or any combination of these. For example:
1. Rage
"Was he angry? Yes he was angry. He couldn't decide whether to shit or go blind."
2. Orgasm
"It was so good I didn't know whether to shit or go blind."
3. Ignorance/Exasperation
A : "How was your exam?" B : "Great. I didn't know whether to shit or go blind."
"I saw him sitting there with his new router. He obviously didn't know whether to shit or go blind.
4. Morton's Fork
"Er, yeah, looks like we're out of drinks. We do have some Milk of Magnesia and a quart of Absinthe."