usually used as an insult and is most used in the world of the interweb, like online games and forums... or sometimes in reality by the computer-dwellers etc.
people who were presumed to be homosexuals that were strung up to an unlit faggot stake. While they were still alive and conscious, they were set on fire and, as the blaze grew worse, medieval peasants would pour live Jews into the blaze. So yeah, not a good word to use
"man, that guyjust called me a faggot. He's such a dumb, insentitive douchebag."