Real simple explanation, based in Fifties/Early Sixties slang:
If you were “hopelessly out of it,” you were a square, which of course nobody wanted to be. Contemplate what L7 draws graphically, and you see the connection.
Form an “L” with the first finger and thumb of your left hand, then complete the "square with a “7” formed by the first finger and thumb of your right hand, like so:
L7
Now that you’re hip to the jive, get out there and dance, daddy-o.
So basically, the line, Let’s not be L7 is a call to everyone to avoid being a square. And, yet, in later years, it was Huey Lewis and The News who said that, “It’s Hip To Be Square”. So who’s right ?
And the Rebel said to Rhonda,
“This is terribly unfair.
Being hip is getting middle class,
Let’s you and I be square.”
And they did, they squared it up.
Rhonda got a haircut,
The Rebel shaved his beard.
They were married and had children,
Which they subsequently reared.
They moved out to the suburbs
And they really disappeared.
Wow, did they conform!