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When people use the word 'Nerf' in AO they mean one of two things.

The first, and most common, is the suggestion that some element of the game was rendered less powerful or useful then it was before the 'nerf'. An example of this would be the reduction of the damage on a very popular weapon. This term originates from early text based RPG games called 'MUDs' where tools or weapons could be replaced with foam equivalents, rendering a character unable to deal damage or use special skills.

The second usage involves the general expression of dislike or exasperation at poor fortune.

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