Yes, the word bitch has an offensive meaning as a noun, but here we're talking about it's use as a verb to convey the natural propensity of people who gather to complain about various aspects of their lives. Perhaps we should use the word kibitz to more clearly and less offensively indicate our intention. At least that word wouldn't set off the anti-spam filters, and it still sort of rhymes with stitch. I'm not sure it has the same allure though. It does have a slightly less depressing feel than the word complain, which doesn't convey the amount of laughter that occurs at one of these events.
The phrase Stitch 'n Bitch may have been around since the Second World War when women often gathered to knit clothing for soldiers (see Knitting for Victory -- World War II). These days women often form groups and meet regularly, knitting projects in hand, to discuss knitting techniques and other topics of interest. This site (stitchnbitch.org) lists more than 1000 such groups worldwide, and offers tips on how to start your own group.
Whatever it's called, the opportunity for women to gather and share their interests, ideas and concerns is a healthy one. It's good for us to kibitz from time to time!
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Knitters still gather for philanthropic reasons too. If you're interested in learning more, you can visit Knitting for Charity for ideas on how to get started.