Leet speak grew and became popular in online games such as Doom in the early 1990's as a way of suggesting that you were a hacker (h4x0r), and therefore to be feared.
Leet, or 1337, is a short form of "elite," commonly used by video gamers to suggest that they are skilled.
This style of writing was originally in use by hackers who were attempting to bypass word-filtering on mail servers. For instance, they would use the term 'haxorz' to replace 'hackers'. Internet users new to hacking adopted the style in an attempt to emulate those more experienced, and usage became widely spread.
In recent times the method is almost never used to avoid word-filtering software, but rather to satirise script kiddies and 12 year olds, or to abbreviate for faster typing. It's interesting to note that in most cases it takes more time to type in leetspeak (due to the constant swapping between numbers and letters) than it would take to just type the words properly.
When using leetspeak, you should be aware that you are almost definitely coming across as a moron.
Person B: What?
Here, Person A appears to be of below average intellect, due to his/her liberal use of leetspeak.
This sentence would have been a bit overkill even then for leet speak. Most would have written it like:
If you w4s l33t u'd kn0w noob.....
| /\/\ |_33+ 2 |)00|)!!!
Though the non-letter characters used to make letters method is used occasionally, it is primarily made up of numbers acting as letters, like so.
y0 j00!!111 u c m3 0wnz0rz dat n00b v3r1ly ?? lolololololololo
Note that j00 is often used in place of "you" and many words end with a 0rz or a z. Also, letters aren't ALWAYS used, just when someone feels like being "l337". Leet Speak originated as a way for getting vulgar words (such as "u r fuxx0rz d00d!!) through filters in chat rooms and games.