Dates back to the 60s at MIT. Although the meaning remains the same it was not a typo. It was used competitivly by programers working on chess AI. When one out programmed the others he would refer to himself as King and the others as pawns. It started being used on Fido Net across the BBS world before internet went public, although it was used on the internet between university's at the time.
Def: To PWN or Pawn someone/something means to remove its status, to be made unimportant. It means that you have proved yourself better than another.