I see it all the time, like here but have no clue? Pawned? Owned? Neither makes sense. From context, it’s like “dissed” or “mocked” but how is either conveyed by “pwned”?
It’s netspeek for “owned”, because a common typo for “o” is “p” (I do it myself from time to time). I’ve always seen it in the context of “you’ve been bested!” or “you lose!”
Generally “I have defeated you in an utterly comprehensive and/or humiliating way. I taunt you for your lack of skill in that endeavor”.
How does one pronounce it?
(Not that one ever would have the occasion to, of course . . .)
Here’s a history, with a discussion of pronounciation. Personally, I prefer to say it to rhyme with “owned,” but with a “p” at the beginning. “Poned,” I suppose.
That’s how I’ve always heard it in my head.
I always read it as being pronounced “pooned,” so you shouldn’t listen to me.
Concur…think of it as someone shooting his mouth off in MMORPG of your choice…gets in a fight and has his ass utterly handed to him on a platter, epecially in a Player vs player situation and or when the victim, if playing properly, should have put up alot more of a fight.
For what it’s worth, I’ve always pronounced it “Pawned”.
Revenant Threshold’s definition is worthy of the Oxford English Dictionary Of Internet Slang Words (Fictional Editon) 
, but I will add the term has a sub-meaning that can be compared to “Wasted!”- for example, if you set up a trap involving manually activated explosives in a First Person Shooter game, and detonate said explosives as an opponent nears- yet have neglected to move yourself outside the blast radius prior to this- you can safely consider yourself to be pwned. 
Unsurprisingly, Wikipedia has an article on the subject…
I play with a nice group of guys on my Counter-Strike team (and some dabbling in other games) and on occasion we will use the term in mock sarcasm, perhaps seriously if the event is stupendous (like killing the other team by yourself or pulling a seriously sick shot or some such).
It’s properly pronounced “poned.” Anyone saying “pawned” will be met with derision.
The wikipedia article I linked to before says there’s no commonly accepted pronounciation because it’s etymology is entirely as a written word.
Most of the gamers I know would laugh at people pronouncing it “Poned”- “Pawned” and “Owned” are the most common pronounciations I’ve heard, but I’m prepared to accepted that many people do pronounce it “Poned” and that it’s just as “correct” as any other pronounciation.
I knew almost all of that, but I still wonder why is that “1” added sometimes:
http://www.gamespy.com/articles/632/632178p1.html
PWNED!!!1!!!1!
Owned, I, One? Like in “I did it” or 1 as an exclamation point?
I suck at relating pronounciation, but “poned” = owned with a p, or 'powned." Unless you’re saying they pronounce it “owned”…but that’s not ‘pwn’. That’s ‘own’, a wholly separate and perfectly good word unto itself.
As for pawn…that’s a chess piece.
Professional Counter-Strike players pronounce it pone/powned, when they say it. My cites are demos with ingame voice where you can hear them joke around.
I know roughly 50 people and none of them say “pawn.” You pawned him? At the pawn shop? Did you get a good return?
The 1 used to be there from people getting so caught up in a sense of their own fantasticness that they misspressed the shift key when trying to put exclamation marks. It’s generally seen as a noobish (loosely translated as “stupid lame kid” in this instance) thing to do.
Nowadays it’s that, but also frequently used in order to mock people like that. Often you’ll get it changed to “OMG I rock!!!1!!1oneone!!” just to show the person typing it is joking.
Depending on how you spell out pronounced words, it’s really closer to “Porned” than anything else- people frequently mistake me for a Briton based on the way I talk though, so I’ll concede that “Powned” is certainly a more common usage- especially in the US- but I’ve heard “Pawned/Porned” from enough people here to believe it’s another variation on the same term. Certainly, no-one’s ever asked me what the hell I was talking about or corrected me when I’ve used the word in gaming-related conversation… but I should also be mindful that many of my friends may have picked up the pronounciation of me, which is both flattering and disturbing at the same time. 
Nonetheless, I’ve heard strangers pronounce it as “pawned/porned”, and so I stand by my pronounciation. Especially because if I can get enough people to do it, it becomes a regional variation.
Pawnbrokers aren’t as big here as they are in the US- a company called Cash Converters pretty well has the market sewn up- so “Cashies” has become synonymous with a pawnbroker.
Indeed, if you told people under a certain age that you were going to the Pawn Shop, they’re as likely to think you were referring to a place that sold Adult Movies, Magazines, and sex toys, as opposed to a place where you can hock your valuables.