A term created by computer/video game nerds used to describe flawless dominance of another in the computer and video game realm. The root word "pwn" was originally a typo of "own" because the "o" and "p" on the keyboard are right next to eachother.
PWNAGE is now an acronym that stands for: "People With No Actual Girl Experience," because most of the people that use the word are usually spending their time absorbed in the computer world and not the real world. Consequently, they don't socialize much in physical reality and therfore, don't get laid. Internet porn and excessive masturbation have become commonplace for them and removed all drive to go out and meet someone to fornicate with.
Look at those super-geeks over there. That's pure PWNAGE for you.