Asshat is a very poetic and elaborate way of telling someone that they are an asshole.
Rather, the expression is referring to the head of the insulted person as an asshat, filled with shit, instead of proper, human thoughts.
Origin of the term
Asshat and the other similar insults have been utilized in the English language since at least the 16th century, though at that time ass was a word used for a donkey, rather than ass, though the association had already existed.
The term was seeing more widespread use as an alternative for the insult asshole in the early 2000’s.
Spread of the term
The phrase had appeared in several motion pictures, as well as television series, like the 1976 film “The Outlaw Josey Wales”.
Urban Dictionary had listed the insult among their entries as early as 2002.
Online competitive gaming, with its toxic community had also contributed to the spread of the term, as players are more than likely to verbally fight each other, throwing around derogative words, both aiming at an other player or their family.