To have sex in water. To have sex in a pool, jacuzzi, hot tub, shower, bathtub, ocean, or other body of water.
After getting into the pool, we waterfucked for hours.
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When you drop a piece of technology in water (ipod, cell phone, etc) and no matter how hard you try to save it, it is damaged beyond repair and since no company will replace a water damaged piece of technology you're pretty much screwed.
Branden: Hey I heard you broke your ipod, can you fix it?
Connor: No way man and I can't bring it back, it's waterfucked.
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When your custom water cooled PC build leaks, and frys your components.
J: Holy shit, I just waterfucked my PC!
K:What do you mean?
J:I just fried all my parts!
The act of shoving a pipe a girls ass and leting the water so it's job