When you're running multiple IM conversations and send an IM response to the wrong person. Then when you realize it or they notice, you apologetically send them "IM confused." The "IM" in this case is a minor double-entendre since also indicates "I'm".
Frank: (Sends the following IM to Jane, thought he was sending to Jake..) "I can't believe she was the only girl at that party last night, as well as the only drunk!"
Jane: My party? What? I wasn't drunk!
Frank: Uhh, IM confused... that was for Jake
Jane: Oh yeah, that makes it OK!? WTH!?