When someone doesn't wipe their butthole after taking a shit and has someone else use their tongue to lick it clean afterward. This is usually done as payment for cocaine or other drugs as was seen in the 1970s by Eddie Nash, cocaine and nightclub kingpin of LA.
Eddie: Oh Jesus, I just had explosive diarrhea and it's all over my butthole.
Crackhead: Oh boy! I'll give you a Crusty Octopus for a gram of cocaine.
Complimenting someone or gassing them up to the point where you're feeding their excessive ego, like a greedy, hungry octopus. 'Octopus' is also phonetically similar to solipsism, the idea that only the self exists.
Lou: You look so amazing today Julia.
Julia: (already full of herself) Omg thanks.
A term popularized by an episode of Comedy Central's "Drawn Together" where Princess Clara reveals her monsterous eight tentacled genetalia due to a curse inflicted by an evil step-mother.
Also used to reference a particularly unsightly or disfigured vagina that induces uncontrolled vomiting.