Fool backwards. You say loof because it sounds a lot better than fool. But, it basically means the same; that the person being CALLED a loof is an idiot.
Jake: "Aha. Look at Max fail."
Ben: "Yeah! He's such a freaking loof!"
When B.A.P are dealing with a fire on the roof, Himchan simply sits calmly in a chair and anounces "Da Loof Is On Fiyah". And legend has it that da loof is still on fiyah.