A concoction of words from the wonderful language of l33t. "pwncakes" is a combination of the words "pwn" and "cakes", and combined sounds like "pancakes". The term is used to indicate that a particular situation is the subject of pwnage.
Z0mG!1!!! PWNCAKES! LOLZ! J00 GOT FUCKING PWNED J00 SHTINKING BUMSLUT! OMFG You did!! And you better liek it or I will pwn j0r mother's anus!