When two gay men are engaging in sex inside a dorm that they both share. The slang and definition are believed to come from some branch of the military when two gay men said they were wrestling as an excuse for being walked in on while in the act of sex.
A classic case of dorm wrestling:
Serviceman Johnson and Serviceman Hernandez were caught engaging in intercourse when their 1st Lieutenant walked in on the act. "WTF are you guys doing!?" asked the 1st Lieutenant, to which the servicemen replied, "Uh... we were wrestling... and we slipped."