The same original meaning as "rode hard and put up wet" in that it was originally used in refrence to a horse which was not cleaned and brushed after taking a ride.
The phrase is now used as a way to descride a slut in that she was rode hard (fucked) and put to bed wet (wanting more, wet as in horny).
"Look at that slut, Sally. She has been rode hard and put to bed wet."
It is said of the situation where a person has the bad luck to make contact with his testicles against an undefined surface or object, intentioned or not.
Given the nature of the word, it is more appropriate to design cases where the interaction is made with a moving object, for example, a ball.
Although it is extremely painful for the victim, it tends to be considerably funny to people who witness it.
Today in the baseball game the pitcher took a nutshot; the baseball hit him in the nuts.
Man, I just watched the funniest nutshot video ever.