A corruption of the word "Owned." This originated in an online game called Warcraft, where a map designer misspelled "owned." When the computer beat a player, it was supposed to say, so-and-so "has been owned."
Instead, it said, so-and-so "has been pwned."
It basically means "to own" or to be dominated by an opponent or situation, especially by some god-like or computer-like force.
"Man, I rock at my job, but I still got a bad evaluation. I was pwned."
To completely fail as a man in either terms of video games, driving, BBQing, or any other event that a real MAN would never lose to a chick.
Me: F**k that guy can out drift me any day.. Friend: you know that's a chick driving right? Me: BULLSHIT!!!! Friend: How does it feel to be pwned by a chick!?!