'leet' or elite in hacker speak. Originally from a group called Dead Cow but spread through forums and sites like a virus and now all the n00bs say it. Also (apparently) one of the favourite phrases of ad0 and ek0, 'famous' hackers on the circuit. People who aspire to become hackers use it. Also used as a term for substituting numbers and letters so instead of saying restocker you'd say r35t0ck3r.
'ZOMG this is so 1337!'
'u r a 1337 r35t0ck3r!'
'Oh please, you are way more 1337 than me!'
'you're both n00bs for even using 1337.'