A person that is usually described as soaking up all the fun out of a room or situation. They are generally quite boring, lame and humourless people and don't allow those around them to have any fun.
Person 1: Hey is laura wagner coming to the party tonight??
Person 2: No I told tara not to invite her, she's your typical type of fun sponge. I mean I do want to have fun tonight don't you?
Fun Sponge is a person in a gaming community that is typically an admin that lets NOONE have any fun. They will no clip everywhere and watch your every single move! They generally take EVERY rule and hold tight to it! No one likes them...
During gameplay, The two fun sponges, Digitalkiller and Lazer, Banned me for having a trap door. They fun sponged me and by banning me.
Someone who won't do something because they are afraid of what others may think about them!
Fun Sponge = girl at party who will not ride mechanical bull cause she has a dress on...who is offered shorts and who conveniently forgets to tell you she has pants in the car...