it is used as an expletive or insult in intense, furious FPS group games.
it has essentialy zero meaning beyond the fact that the term "nigger" has shock value and therefore makes the term more noticeable and powerful.
the user is, most often, simply trying to use the most disgusting, shocking, and comedic terms possible against someone else.
the most common situation involves 4 person Halo (1,2,3) multiplayer.
proof of the non-racist nature of the term is its use by Mexicans and Asians who are sensitive to and have been exposed to racism (as apposed to Mexicans and Asians raised in mostly white neighborhoods and therefore less sensitive to racism... who also use the term)