The expression “go pound sand” is from two longer expressions: “go pound sand down a rathole,” and “go pound sand (or salt) up your ass.” It’s disdainful and dismissive, like telling someone to go fly a kite or go play in traffic, on a par with the forceful suggestion that the recipient go do something anatomically impossible. The expression is common in the midwestern US.
The Oxford English Dictionary says the expression is a North American invention that first appeared in print back in 1857 meaning “to engage in a pointless, menial task.”
Literally pounding sand (with a shovel, for instance) is indeed a pointless chore; the sand does not compress or adhere to itself the way clay would, so the end result is much the same as the beginning. There are many tasks, such as nailing Jell-O to a tree, which would probably be more fulfilling.
On the other hand, pounding a beach of lovely, warm sand with my bare feet, while the warm surf rolls in beside me, would be very fulfilling.