To be so startled/terrified that you shit yourself in such a way that your excrement hits the floor and burns a solid hole directly through it.
Used to indicate that a situation is/was exceptionally horrifying.
Similar to shit bricks
When I saw the murderer's mask, I shit a hole through the floor and ran.
As in Putin descending on his coccyx and soiling his pants
putin-reportedly-took-a-big-fall-as-speculation-over-worsening-health-grows. When shit hit the floor