Originating from somethingawful.com, this word was originally used as a surname for one of the writers there. It was meant to mock the use of acronyms on games such as Starcraft and programs like AIM. It was popularized, ironically, when people began to say it as rejection of people who overused these phrases.
Starcraft Player #1: OMG ZERG RUSH!!! WTF I HATES JOO!!!
Korean Player: OMGWTFBBQ, KEKEKE!!!
It can be interpreted simply as gibberish, when one wants to emphasize one's own incoherence, lack of understanding, or used when one wants to emphasize one's own awesome abilities, such as the power to make really good waffles.
http://www.encyclopediadramatica.com.../Omgwtfbbq.jpg