The implied understanding of "it" being (butt, dick, etc.). Basically, the two words that you tell someone in a sarcastic tone, either just for fun, or because you are mad at them.
Can also be used to mean: go away, you agree with someone, or whatever.
Tom:Hey, i missed class Tuesday can I see your bio notes?
Kim:You know what you can do? Touch it.
Mike:Are you gonna get me food?