The Pits of Hathsin is a system of caves on Scadrial in which Atium crystals grow. It is also a concentration camp for troublesome Skaa set up by the Lord Ruler to mine the Atium crystals.
Allomancy cannot be used around the crystals, as they will shatter. That is why skaa are used. All skaa in the Pits have small scratches along their arms from the 'teeth' of the crystals. The Pits are looked after by House Venture.
The Pits are seen as Hell by many skaa. Each skaa has a week to find an atium geode. If they fail, they are beaten savagely to death.
Kelsier is the only known person to survive the pits. Only days before the fall of the Lord Ruler, Kelsier returned to the Pits, destroying all the atium crystals he could find, and setting all the skaa prisoners free.
Brandon has also confirmed that the Pits of Hathsin is the location of the liquid form of Ruin, the counterpart to the Well of Ascension.