As I understand it, Fumoffu is a deity created by a few people to embody thier feelings of hopelessness and greed. As in: Before you claim an NM or fight a tough boss battle, you yell "Praise Fumoffu!". That way, if you get a great drop or the outcome is good, it is because Fumoffu had smiled on you and bestowed you with the win. But if the drop is bad, or you die, then Fumoffu is testing you, wanting you to become better. (Christians may find this idea to be a bit familiar...)
If things go very badly, then everyone just blames Slappybag. It's easier than yelling at other party members or your friends.
Is it silly? Yes, it is. But it has made for some pretty entertaining conversations in LS chat on those long NM hunt nights...