The phrase can be used alone, or can be accompanied with a gesture. Holding your fist out in the "thumbs up" position, the speaker makes a short jab upwards, symbolizing sticking one's thumb up their ass.
Man: "Hey, I was sitting there!"
John: "Well you're not now."
Man: "Yeah, but I want to sit there."
John stuck his thumb out and said "sit and spin."
DICK: How 'bout you go sit and spin!
HARRY: That shit was funny.
Example #2: Today on television I heard Rosie O'Donnell tell Donald Trump to sit and spin. I almost pissed my pants.
2. A sexual practice where a man lays on his back and his partner sits on top of him inserting his penis into whatever opening is desired then the partner on top spins around 180 degrees or 360 degrees while remaining engaged with the man laying on his back.
The expression "sit on it and spin" is sometimes used by people unfamiliar with the Sit'N Spin toy and the original origin of the expression. (There are several images of Sit'N Spin available via internet search.)
Friend 2: (flips middle finger) "Sit and spin, bitch, you just wish you had tickets."