The term serves as an analogy to the vagina's role as receptacle for the penis, with male facial hair viewed as analogous to vaginal pubic hair
1 Jail's version of pussy
2 A man's asshole
3 incarcerated pussy
Joey the Rapist: thanks my nigg you know i enjoy keeping in shape.
Bubba: nice ass, back where i come from we call that thurr prison pussy!
Joey the Rapist: thanks i guess...
(anal rape almost always follows a conversation with the word "prison pussy")
Junior: "Not now, Bubba. I'm tired."
Bubba (yanking Junior's covers back and ramming his jimmy up 'in there'): "Stay in a child's place, bitch!"