The word failfest is a compound word composed of 2 words fail and festival(fest). Fail is comonly used to let someone know that they suck at something or they got pwned. A festival is a celebration or gathering of some sort. So a failfest is a gathering or celebration where people that fail go.
As Johnny walked with his friends to school he tripped and fell on his face. His friends said " Lol Johnny should go to failfest for that, what a noob."