Used to describe a situation that has caused grief. This can be used in very serious situations or completely retarded ones. Kinda like "That Sucks".
It can also be used to describe intensity.
Dean: "Dude... My mother passed away yesterday"
Tristan: "Oh man. Shit's rough."
OR
Dean: "Hey look, I typed 'teh' when I wanted to type 'the'"
Tristan: "Oh man. Shit's rough."
OR
Dean: "Dude, have you seen 'Requiem For A Dream?"
Tristan: "Oh man. Shit's rough."