to engage in coitus. Origin: the Ojibwe natives in Minnesota. The Ojibwe have a phrase "Poonjegay" which means "to dip meat in grease." Among the teenagers there, it's shortened to "Poonj" and has become slang for sex.
internet slang. it really more fo a joke to poke fun at all the acronyms used in chat room talk. A variation on LMAO, it means "laughing my fucking ass off mother fucker"