In Aztec moral thought, there is a strong emphasis on purity and cleanliness. This is expressed through the concept of "tlazolli" (roughly: trash, filth). In Louise M. Burkhart's book The Slippery Earth: Nahua-Christian Moral Dialogue in Sixteenth-Century Mexico (1989), she explains that tlazolli is a term that "covers a whole series of impurities used in moral discourse to connote negativity" and that the symbolism of tlazolli would "induce moral repugnance by association with what is cognitively disturbing and/or physically repulsive" (88). There was a special emphasis on "various body secretions" (88) as well as a connection with sexuality. The filth or impurities of tlazolli were also contagious and could spread, even to people who were not immoral or unclean, and was its own force. The consequences of this could be quite dangerous. For example, tlazolli contamination could cause sickness and even death, known as "tlazolmiquiztli" (298). Alfredo López Austin describes tlazolmiquiztli as something that, while it was initially associated with those who were thought unclean (like drunks and adulterers), could quickly spread beyond that as its own powerful force. Aside from harming those "unclean" people, López Austin notes, it could also harm "children, spouses, pregnant women, animals, and plants" (Cuerpo humano e ideología, 298; my trans.). It could even spread through the air or bad smells. Thus, the prospect of becoming contaminated with tlazolli would be terrifying for Aztec individuals, even for those who had otherwise lived a life of cleanliness and purity.

In The Fate of Earthly Things: Aztec Gods and God-Bodies (2015), Molly Bassett writes that "[t]he name Tlazolteotl (Trash God), from tlahzolli (trash) and teotl, alludes to mastery over 'evil and perverseness—that is to say, lustful and debauched living. It was said that she ruled and was a mistress of lust and debauchery'" (96; internal quotation here taken from Sahagún, Florentine Codex, Book 1, 2:23). Bassett points out that Tlazolteotl would not have only referred to one single deity (teotl), but rather that there were associations with various teteo (plural). For example, Tlazolteotl is associated with a group of four teteo (women who were seen as goddesses) as well as Tlaelcuani (96; 233n131). Burkhart explains that Tlaelcuani ("Liver Eater" or "Eater of Foul Things") is a deity who "removed people's filth from them in the indigenous confession rite" (92), which is what I take it you're referring to in your question. In addition to Tlazolteotl, there was also Tezcatlipoca. Burkhart describes Tezcatlipoca as "generally lord of all discord" and notes that Tezcatlipoca had an association with tlazolli and bringing tlazolli along with him (92). Tlazolteotl and Tezcatlipoca could not only remove impurities from people but they could also "cause immorality" and "punish immoral people" (Burkhart, 92). So we have an image here of deities that, while they could remove impurities and immorality, could also cause immorality, punish immorality, and bring tlazolli along where they went in addition to removing it. Thus, there is a kind of ambiguity to these deities and so if a figure represented them, it would not always be good or bad. (I have emphasized the negative elements here because we're trying to understand the nature of this specific fear, but these figures are not always negative in Aztec thought.)

The so-called "poop goblin" is Cuitlapanton. She is what is known as a tetzáhuitl (what is getting translated as "goblin"). Alfredo López Austin explains that a tetzáhuitl can be a symbol for "the gods directly announcing a future event in a voice of warning" and that their appearance would represent a "challenge" to the person to which it appeared (López Austin, "Las señales. La palabra tetzáhuitl y su significado cosmológico," 22; my trans.) Cuitlapanton is a "personification of tlazolli" and "crept along the earth’s surface, haunting the trash heaps and the places where people went to urinate" (Burkhart, 95). Believing that one saw Cuitlapanton (especially when one when out to the bathroom at night) would have been terrifying because it would be associated with the worst of tlazolli. Remember that tlazolli was seen as a contaminating force that could harm even the otherwise innocent, and that getting contaminated with tlazolli was feared to cause sickness or death (tlazolmiquiztli). To see Cuitlapanton, then, would have been quite a serious omen: it would have been understood as a very disturbing, divine warning "that one would die" (Burkhart, 95). So that's why Aztecs would have been afraid of Cuitlapanton.

Note: I am a philosopher, and one of the areas that I study and teach is Latin American philosophy, including Aztec philosophy, and so that is where this answer is coming from. This is one of my areas of study, but it is not my exclusive focus as a philosopher. If there is a specialist in this area, then I will defer to them on this.

References

Bassett, Molly H. The Fate of Earthly Things: Aztec Gods and God-Bodies. Austin: University of Texas Press, 2015.

Burkhart, Louise M. The Slippery Earth: Nahua-Christian Moral Dialogue in Sixteenth-Century Mexico. Tucson: University of Arizona Press, 1989. See especially chap. 4 on "Purity and Pollution."

López Austin, Alfredo. Cuerpo human e ideología: Las concepciones de los antiguos nahuas. Mexico, D.F.: UNAM, 1996 [1980].

López Austin, Alfredo. "Las señales. La palabra tetzáhuitl y su significado cosmológico." In Estudios de cultura náhuatl 57 (2019): 13-29.