It's a censored way to say "fuck." Used in chatrooms where spelling out "f-u-c-k" is banned.
However, if you write it like this when you are allowed to say "fuck," you're just being a faggot. C'mon, you're 1 LETTER SHORT. Might as well just spell it the way it is.
Guy 1: k, u no wat, f*ck this
Guy 2: ... *cough, cough, FAG, cough, cough*
Guy 1: dude, this chatroom wont let me spell it out
Guy 2: o... kk nvm then