1. Laughing at somebodys complete stupidity in an online setting such as a forum or youtube.
2. Can also be said in an effort to make somebody look foolish.
3. This may sometimes be said to denote confusion with no bad intentions intended.
Also it is intentionally spelled incorrectly to annoy people of the Grammar Nazi Disposition.
Somebody posts something nonsensical or foolish on a forum, and the first reply is 'lul wut?'
After a big looong rant on the forum about internet peoples spelling someone reply's lul wut? to infuriate the OP (original poster)
A friend text you an incoherent message and you reply with 'lul wut?'