According to the narrator, humankind’s “objection to shit is a metaphysical one.” The daily emptying of the bowels proves that Creation is unacceptable. And, this produces another “either/or” scenario: either shit is completely acceptable, or humankind has been created in an unacceptable way. It can easily be agreed that humankind lives in a world where shit is denied even though everyone knows it exists. This aesthetic ideal, the narrator says, is known as kitsch. Kitsch is the denial of literal and figurative shit, and it excludes from the world that which is considered unacceptable.
This passage, of course, is more concerned with metaphorical shit than with literal shit. The metaphorical shit that is consistently ignored throughout the book—the atrocities of communism, Tomas’s infidelity—is what Kundera means by kitsch. Ignoring what is unacceptable while simultaneously pretending that one lives in an acceptable way is the problem as Kundera sees it.