It's generally used in two ways
1) When describing a very over-powered ablility within a game that allows certain players an unfair advantage. This is often down to user perception though. In many cases, the ability is not over-powered as long as you know how to counter it.
2) Used insultingly when a player complains that their character is underpowered. Typically they will make suggestions about how their character could be improved. If these requests are excessive, their fellow gamers will accuse them of wanting an I win button.
Sam: So you want one of your most powerful abilities to be available non-stop instead of needing 5 minutes to cool-down. Basically you want an I win button?
As such it was called the "I Win Button" since (if anyone survived) the remnants were easily mopped up, nomatter how many they initially were.
LoL I make win by I Win Button kthx!