Evidently not a real sovereign state, however the word is a pun on the suffix "stan", which is common in Muslim areas. Sand nigger is a term used offensively against Arab and/or Muslim people. So it means generically an Arab and/or Muslim country.
"look, if Muslims and Arabs hate Western culture and still live here, shouldn't they go back to sandniggerstan?"
Bro 1: Bro! That chick was totally into you. She was hitting on you!
Bro 2: Nah man! She just wanted to allow me to let her use my scanner
Bro 1: What a scandigger!
Someone of Arabic descent since most their land is covered in sandy deserts and they resemble black Africans. Mediterrean Europeans, Iranians, Turkish, Caucus people, Hebrew people, and SouthCentral Asians cannot be sandniggers because most of their lands or not sandy deserts and they are white Caucasians. this word is often used by westerners to refer to A-rabs.