The Jargon File states that word was coined around 1975 at MIT. Under ITS, when you first walked up to a terminal at MIT and typed Control-Z to get the computer's attention, it printed out some status information, including how many people were already using the computer; it might print "14 users", for example. Someone thought it would be a great joke to patch the system to print "14 losers" instead. There ensued a great controversy, as some of the users didn't particularly want to be called losers to their faces every time they used the computer. For a while several hackers struggled covertly, each changing the message behind the back of the others; any time you logged into the computer it was even money whether it would say "users" or "losers". Finally, someone tried the compromise "lusers", and it stuck. Later one of the ITS machines supported "luser" as a request-for-help command. ITS ceased to be used mid-1990, except as a museum piece; the usage lives on, however, and the term "luser" is often seen in program comments and on Usenet. "lusers" is also a common IRC command to get the number of users connected to a server or network.
A Luser Attitude Readjustment Tool (abbreviated LART) is "something large, heavy and painful, used to respond appropriately to particularly annoying lusers." A LART can by definition be anything from a pat on the back, to a small tactical nuclear attack, depending on how much adjustment the attitude needs. Other names for a LART include cluebat, clue stick, clue-by-four and Board of Education.