In the center of a large area with no notable economic, social, geographic, cultural, or other values. The "Fucking" aspect of the phrase is usually associated with the frustration that comes with being located in the "Nowhere" that is being referred to.
"Jesus fucking scrotum-christ, where's the map?! We're in the middle of fucking nowhere!!!"
A place located in such an obscenely obscure part of the world that one would rather fuck his/her own sister/brother than to even fathom venturing to it for any reason. At all. Ever.
Ted: Hey man, can you take me home?
Bob: Sure bro, where do you live?
(Ted gives his address)
Bob: No way, man. That's in the middle-of-ass nowhere. Good luck finding someone to haul your ass all the way out there.
Carla: Oh shit, we're lost. And we're in the middle-of-ass nowhere.
Brandon: Oh God, I'd legitimately rather be fucking my own sister than sitting here.
Carla: I AM your sister, Brandon.
Brandon: ...I'll grab the condoms from the truck.