A Pissy Slit is a slang word for the female Vagina. It is a naturally occurring "slit" shape from which springs "piss" after large quantities of liquid are consumed. Hence the name "pissy-slit".
Used as an exclamation, particularly used by a third party to either emphasize some shit goin' down, or to make an awkward situation even more inappropriate.
Person 1: Shit Bromethius, we just sank it into triple overtime.
Bromethius: AWWW Pussyshit!
-or-
Person A: You wanna fucking go, dickshit?
Person B: I'm gonna rape your family!
Person C: AWWW Pussyshit!