It can be yelled or uttered under ones breath, both with roughly the same meaning of "I am not fond of what just happened to the point of incoherence and so I will utter a nonsensical phrase."
The phrase originated in the online gaming world and was uttered randomly upon the death of a player. The player and his friend then sat in silence pondering upon this new exclamation for not only did it rhyme, it also combined a variety of strange things all in one.
It can also be shortened to simply "Fuck Nuts"
Player 1: Fuck nuts and paper cuts! You got me!