Your precious buttocks has now become the center of a very farcical taunt. This phrase implies that "you are going down" in the near future. This phrase being said to you means that your inevitable fate is nearing. It is only half of the full sentence "your ass is grass and i'm gonna mow it." Basically someone is threatening you and you better get the hell outta dodge.
"You fucked my wife enough times Todd, your ass is grass!"
Approximates to: You just fucked up big time, and now you're answering to me! Originated in the military.
Commanding Officer: You tried drifting a Humvee till it went Tango Uniform and then blamed it on your bunkmate?! Your ass is grass, boy, and I'm the mower!