For people who don't yet get the Sand Pit quest, you have to complete quest referring to build entertainment structures (5 Trading Posts, 3 Shaman Shops and a Theater) and build Ice Statues. After completing that quest, you have to build 3 Villas and upgrade it to level 3 and it should appear.
Since Sand Pit costs a lot of cut stone, shipping cut stone is recommended. You also have to keep Quarries and Stone Processing Mills working.
Sand Pit is needed in producing sand for starclay, cut marble and glass. More than 6 Sand Pits is necessary but if you want to increase production, more than 9. The reason why many sand pits are needed is because sand pit is only available on Mystery Shore and it does not give much in terms of numbers.