1. "Smashed Bag of Assholes" is phrase used in a figurative manner to describe something that is disgusting as fuck, such as crumpled up paper bag full of prolapsed anuses.
2. This phrase is sometimes used to describe a location containing ignorant people.
1:
Girl: Like my new dress? I thought of you when I bought it!
Guy: You look like a smashed bag of assholes. Now get your bitch ass out of my face.
2:
Dude: That bar was a smashed bag of assholes.
Some other dude: It certainly was. Onto the next one!