It means very scared. I guess the implication is that you have 'puckered up' - or would you need me to explain that as well? ;) Like any use of 's??t' - use it carefully, to avoid offending people. It would be OK in something like stand up comedy, where they often offend people, and among relaxed friends.

only use amongst close friends and colleagues who also use that type of language. It means to be so frightened as to mess your underpants [British] or under garments clothes in other English's.