The nerd's attempt to rationalize his lacking sex life taken to the extreme.
However, it's utterly hilarious. Just don't take it seriously (please).
Nerd 1: Why won't Michelle go out with me? I bought her an epic mount and wrote her into my fanfic.
Nerd 2: Did she tell you she just wanted to be friends?
Nerd 1: Y..Yeah.
Nerd 2: Well, according the ladder theory, you are on her friends ladder and therefore will never be getting any.
Nerd 1: *head explodes*