Freshly Dug Dirt is found on the southernmost island (the second one, beyond the metal framework) of Tanaris. The two islands in this area are not found on the map of Tanaris or the world map, but you will appear near the bottom edge of the world map below Kalimdor. To get there you will need a certain buff, or to corpse hop. Swimming speed modifiers (like potions and equipment) do not stack with this buff.
It is involved in the following quests: