This is a slang term used mainly between gay or gay-friendly people. It refers to the asshole or anus which is located between a human's buttocks (i.e. ass, bootie). Thus we get bootie hole, or the hole in your bootie. The use of this term implies that both the person speaking it and the other person in the conversation are reasonably knowledgeable and accepting concerning anal sex. So it is best to confine your use of this term to gay tolerant locations such as gay bars where gay identification will not earn you a punch in the face. Straight acting males may pretend to be puzzled.
Sexual invitation: You wanna play with my bootie hole? Semi Straight Guy Replies: No homo, man! I don't do shit like that! But later in the evening the Semi Straight Guy may reply: Man, do I really look that gay? And at closing time you might hear: Your place or mine? from the very same dude. Between out and out gay people, one person might say: Don't be fooled by the steel toed boots on that whore. I bet that sluts's bootie hole is bigger than a three-car garage. The queen on the next bar stool might reply: I've heard you can park a semi trailer in there.