A derogatory name for a small man. It does not have to be an African-American man, but any male of small stature. It possibly was coined because of the prevelant Western interpretation of "nigger" as being associated with someone of very little worth. Therefore, "nigger bits" would be someone small and worthless.
Can also be used interchangeably with words like "jerk" and "asshole" for a person who is miserably disagreeable.
Guy #1: "Excuse me, but there is a line here, you'll have to go wait your turn at the end".
Guy #2: "Screw YOU! Just because I'm short doesn't mean I can be pushed around!"
Guy #1: "Listen, nigger bits, take your miniature self to the back of the line before I kick your midget ass".
Woman #1: "Yeah, nigger bits, take it to the back of the line. You little Napoleon shit!"