Essentially it means "is much better than" or "humiliates", and is most commonly used as a verb. "Pwn5" is the ultimate way to say "pwns", much in the same way "1337" is the ultimate way to say "l33t".
The "5" represents the "s". It is also mid-way between 0 and 10, so is considered a direct hit between the eyes i.e. perfect. This stems from the origins of the word in online multiplayer gaming, where a perfect shot is respected.
So if you want to be 1337, you should say "pwn5" instead of "pwns" ;) :P
7h15 w3b5173 pwns
Th@ l337 h4X0r pwns 7h053 l4M3 n0085
more "1337" ways to say it:
7h15 w3b5173 Pwn5
Th@ l337 h4X0r Pwn5 7h053 l4M3 n0085
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