On CollabVM, the term fag is usually used by someone to insult another user. It is commonly said when another user performs an action that the other user doesn't like (such as: running malware, bluescreening the VM) however it may be used to annoy people. It is also associated with the hard R, which is commonly said on VM0. This term is also homophobic, and the least offensive term you could substitute is Forkies.
The usage of the term "fag" most likely dates back to when CollabVM exploded in popularity in 2015, where multiple users were using the term left and right. The term was used constantly thoughout CollabVM's history, and is still used today on all VMs for the exact reason.