From China Digital Space
草泥马 (cǎo ní mǎ): Grass-mud horse
Grass-mud horse, which sounds nearly the same in Chinese as “f*** your mother” (cáo nǐ mā), was originally created as a way to get around, and also poke fun at, government censorship of vulgar content. After the grass-mud horse first appeared on Baidu, an interactive online encyclopedia, netizens continually expanded the lore of the grass-mud horse by creating catchy songs and fake nature documentaries on YouTube and other video sharing sites.
The phrase is especially meaningful on a political level because the Communist Party is often described as "the mother" of the people--thus the phrase, "f*** your mother" can also suggest "f** the Party." The grass-mud horse is one of many mythical creatures created by netizens in response to increasingly strict censorship measures.
The term has since developed an additional meaning: one who is a “grass-mud horse” is someone who is web-savvy and critical of government attempts at censorship.
For more on the grass-mud horse, see China Digital Times.