'To sit on one's haunches' means 'to crouch down'. 'Haunches' refers to the thighs and buttocks together, but note that we really only use this word in the phrase 'to sit on one's haunches.' It's pretty rare to hear it used outside this phrase. I hope that helps! :)

I agree with with Tracy's answer as to the meaning of the expression. I would just like to add that it can also be used figuratively in cases where a person is not literally squatting down. For example, one person might say to another, "just don't sit on your haunches, DO something!" In this sentence the speaker is complaining that the other person is doing nothing and needs to take action. Also, "haunch" is used to describe meat, particularly of a large animal: e.g., a haunch of venison (that is, a leg that includes up into the buttocks of the animal). It is not used to describe the same body part of a chicken, turkey, goose.