2) Sexual context: a guy who is getting his dick sucked or is pounding some hot chick.
3) Drinking context: in reference to a guy or girl who is completely shitfaced and is dancing in a manner where there head is down, hand(s) up and are jumping. They are also most likely spilling their drink everywhere as they are about to blackout.
Kevin: <quickly jumps up and down> "DO THE DOOTY DOOT!"
2) Brandon: "Hey, I think James is in his bedroom with that hot brunette!"
Justin: "Sounds like he is about to Do the Dooty Doot!"
3) Heather: "Holly shit, Nicole, look at Kathleen, she looks like she is going to blackout soon!"
Nicole: "She probably will considering she is doing the Dooty Doot!"