In the gay community, it's an adjective used to describe a sexy guy, but not the feminine kind of guy, but a more masculine guy; one who you wouldn't identify as being gay if you saw him on the street.
Used to describe an attractive, muscular, manly man. 'Woof' refers to the barking of a dog or howling of a wolf. A person will say 'Woof' to a guy/man when he/she thinks he is hot or is attracted to him. A form of being in awe of the person, like saying "wow".
Often used in the gay scene between muscular, manly, men.
* Hey, did you see that guy over there? The muscled one with the tattoos.
° WOOF!
* Yeah, he's reallyhot!