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1.
When you realize you are a dunce, and therefore you are dunsted.
A dunce is a stupid person.
So, if you are dunsted, it's like saying you got punked, fooled, etc because you are silly and have been dunsted.

As an alternative term, one may use dunstin', meaning basically the same thing, but it's like saying your burning because you are a dunce.
"Dunsted!!"

"I have a million dollars."
"Really?"
"No!!!! You're dunstin'!!!!"
by harley. August 30, 2008
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