Jealous Ass Insult

Okay, listen up, smoothbrain. This joke works on a double meaning of 'shit.' When you say 'shit' here, it means both literal poop and also nonsense or insults. So, the joke is saying you talk so much nonsense that your butt is literally jealous because it can't produce as much actual poop as your mouth produces nonsense words. It's a rude way to say you talk too much trash, but you already knew that, didn't you?