Fool backwards. You say loof because it sounds a lot better than fool. But, it basically means the same; that the person being CALLED a loof is an idiot.
Jake: "Aha. Look at Max fail."
Ben: "Yeah! He's such a freaking loof!"
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A way to exclaim that something is funny.
Joe: "I saw Jake walking and he randomly slipped on a sheet of ice. It looked SO funny."
Ben: "Haha like omgwtfWAFFLEZ!"