Originally it was used by the Dark Lord to complain about a ruling by the DM that caused him to say, not do nearly as much damage as he expected to in D&D.
Now it is more of a word generally used to question anything that seems illogical, out of place, ironic, or hypocritical.
DLC: I cast LIGHTNING BOLT on the group of **name of monster we're fighting**!
*rolls a bunch of dice*
I do 32 Damage. Ahh...
Steve (DM): The lighting seems like it SHOULD have hurt them... but they don't appear hurt.
DLC: Uhh... Steve, **name of monsters** aren't immune to lightning spells... unless... oh CRAP! In PLAYER I know what we're fighting, but my character doesn't know! Dammit. *Arrogant look.*
Later example (2004-05)
Me: Max, a pound of feathers weighs less than a pound of bricks.
Max: Uhh, Steve... they're both a pound...