A horrible place that is considered (by the majority of thinking members of homo sapiens) completely undesirable to live, work, or play in. Oftentimes, but not always, shit holes can smell real bad as a result of cow/horse manure, methane or the like. Hence, the origin of the term.
A shit hole is nearly completely devoid of any cultural, economic, or career opportunities. Shit holes are boring, stale, and are not conducive to fun activities aside from hiking, camping and , maybe, milking the occasional cow. Shit holes are either located in rural areas or they are small towns where the citizens -- being unused to actual civilization -- often delude themselves into thinking that they live in a major metropolis just because they spend 5 minutes every other day stuck in traffic.
People that live in shit holes may or may not be well-intentioned -- but almost all of them are woefully ignorant -- believing in unfounded stereotypes regarding those that live in more diverse, exciting areas of the world. These shit hole dwellers often detest activities partaken by city folk (such as dancing, eating ethnic foods, participating in festivals, baseball, or visiting museums) preferring instead to milk their cow or put their lives in danger by obliviously running headfirst into freezing areas inhabited by mountain lions just to randomly scoop up a pretty rock. Due to their severe lack of worldly exposure, shit hole dwellers not only have gross misconceptions and prejudices regarding city dwellers, but anybody who is different from them (be it on the basis of nationality, creed, or skin color).
Scientists are still trying to explain why a small percentage of the human population would willingly choose to harm themselves and loved ones by opting to live in shit holes. A promising hypothesis that attempts to explain this most irrational behavior is that shit hole dwellers are willing to forgo job security and a rewarding career in or near an exciting major city to live in the outdoors. When asked why they would do this, respondents answered.. "It's because the outdoors are puuurrrty!!!" To test this radical hypothesis, leading scientists from Columbia University and MIT plan to administer I.Q. tests to several groups of shit hole residents as a first step in testing for devolution.
Arizona is the ultimate shit hole. I'd much rather live in the corn fields of West Lafayette, Indiana or amongst the Amish of Lancaster, Pennsylvania. At least the latter are northerners.