Many people are under the impression that this word means "owned" but with a hip, trendy connotation, as if by using it they become part of a cool in-group. However, the meaning is in fact slightly different, and follows more along the lines of: "I am a stupid fucktard who thinks that by intentionally misspelling words I am building solidarity with the internet community, completely unaware that this gimmicky act actually just makes people hate me."
Andrew: It didn't take you long to lose all your friends. Pwned!
Betsy: If you ever say that "word" again I will disembowel you and play jump rope with your innards.