1. A critical situation which may have disastrous consequences if it goes wrong.
2. A tough decision that may be difficult.
Kind of like you are slowly getting into a really hot bath and your balls are hanging in the steam, it is going to be difficult!
Used to highlight the magnitude of a problem.
1.(when he says that he just found out his gf has been sleeping around) "Oh man, you are so steamballed!"
2.That is such a steamballer of a problem!
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