1. (Or "write-only memory", "WOM") The universal data sink (originally, the mythical receptacle used to catch bits when they fall off the end of a register during a shift instruction). Discarded, lost, or destroyed data is said to have "gone to the bit bucket". On Unix, often used for /dev/null. Sometimes amplified as "the Great Bit Bucket in the Sky".
2. The place where all lost mail and news messages eventually go. The selection is performed according to Finagle's Law; important mail is much more likely to end up in the bit bucket than junk mail, which has an almost 100% probability of getting delivered. Routing to the bit bucket is automatically performed by mail-transfer agents, news systems, and the lower layers of the network.
This term is used purely in jest. It is based on the fanciful notion that bits are objects that are not destroyed but only misplaced. This appears to have been a mutation of an earlier term "bit box", about which the same legend was current; old-time hackers also report that trainees used to be told that when the CPU stored bits into memory it was actually pulling them "out of the bit box".
Another variant of this legend has it that, as a consequence of the "parity preservation law", the number of 1 bits that go to the bit bucket must equal the number of 0 bits. Any imbalance results in bits filling up the bit bucket. A qualified computer technician can empty a full bit bucket as part of scheduled maintenance.