This idiom represents the moment you realise that (usually) your life is not going as well as you thought it was. It is associated with a sudden change. Something you did not expect. A new way, normally negative, of looking at the world around you. When John saw his wife with another man was when the ground fell out from underneath his feet. When the ground falls out from underneath your feet, you will realise you were not aware of the situation.

This phrase is used mainly when someone did something that required retribution (punishment) and hasn't received it yet. It literally details a scene when someone walks over a pitfall. For example, Chris shot the sheriff (or any bad thing). Someone might say "Be careful when the ground falls out from under you", because of retribution from attempted murder. A similar turn of phrase is "to pull the rug from under you" detailing when someone might screw them over by making them trip or fall over. The phrase in a literally meaning just means that you fall into a hole (possible a pitfall made by someone) feet first. If you have any questions feel free to ask!