Replying to someone admitting to doing something incredibly stupid or makes a stupid comment.
Using only "W" as a reply is the same as rolling ones eyes or saying "your an idiot".
Or a shortened version of: "Your as stupid as George W Bush"
Friend2: Why not?
Friend1: He is such a W!
Friend2: Why do we ever hang out with a rich moron anyway?
And to add insult to injury, some poophead decided to use it three times in a row to make an acronym that people have to say all the time! (See WWW.)