Many people talk about the pit of despair and of feeling trapped within a situation.
A pit in a dream makes us more conscious of this particular feeling. We may be in circumstances that we cannot get out of, or may find that if we are not careful we will put ourselves in such a situation.
If we are digging the pit in the dream, we may be creating the situation ourselves.
If others are digging the pit, we may feel we have no control over our circumstances and that doom and disaster are inevitable. You may also wish to consult the entry for abyss.