When you are masturbating with the television on and a commercial comes on with a baby in it, effectively ruining your self-touch session and causing limpness.
Limpyfao is a play on words for the word LMFAO (laughing my f**king a** off). The difference between limpyfao and LMFAO is that limpyfao is when your limbs go limp while laughing. When you're laughing so hard, you're crying, can't breathe, etc. Limpyfao can also be used as just a fun word to use in general!