First used by Rainbow Dash, a dyke-pony from the most manliest cartoon show in history, My Little Pony: Friendship is Magic.
It is a term used to call attention to something that is not cool enough, and that it needs to be "20% cooler".
The usage has become popular among the bronies/bronys after airing of Season 1 MLP: FiM's episode, Suited for Success.
-Dude, what do you think about my model?
-Dude, what do you mean? Is it cool or not?
-Well, it's cool, but not cool enough. It needs to be... 20% cooler.
Used by the tomboyish pony Rainbow Dash in the episode "Suited for Success" of My Little Pony Friendship is Magic, it is often used by bronies to refer to something that is not cool enough.
Coolness levels can only be raised in increments of 20%, thus things can be 20, 40, 60, etc percent cooler.
Can be used to refer to temperature as well.
Guy 1: Yo man check out Black Ops' gameplay, its amazing!
Guy 2: Meh, its ok, needs to be about 20% cooler.
CNN reporter: The reactors are still overheating and an effort is being made to cool them.
Couch potato: Hmm they need to be about 20% cooler.
Something that is in any way involved with My Little pony FIM.
bob: I heard Stephen colbert likes ponies.
bob's friend: He's now 20% cooler