The phrase's roots stem from minor car scratches or 'dings'. Minor annoyances that do not affect the performance of the car whatsoever.
"They're going to ding us if we don't submit an approval form first."
"I was dinged when we played Jeopardy for not phrasing the answer in the form of a question."
The concept trickled down to other MMO's as well, but few actually know the true origin of the word.
Other: Gratz. (congratulations)
Other2: w00t gratz.
Other3: Noice gratz.
Me: ty 8)
guy #2: Ding.
'Ding' messages are usually reserved for friends, or your members of your guild- as people in the general chat show hostility to your level-up.
May appear from time to time as part of another word; eg. 'Ding Dong', 'Ding-a-ling'. etc.
Feelings of joy and happiness usually surround this word, increasing in intensity with higher levelled 'dings'.
'Gary Coleman, I'm only three bars away from a ding'
'I'm going to get my ding then log'