Haxxing usually occurs when 1 person pwns many people in a PvP game, like Chip 'n Dales MMORPG. Someone who gets pwned(n00b) usually says something about hax and how a user is haxxing. The haxx0r will probably get reported to the admin. Its pretty much a word for hacking.
omg i know you use hax! im gonna report you to the admin you stupid faggot! Leave you stupid haxx0r! i know your haxxing!