A Porn Battle, basically, is a number of fans producing the hottest fan fiction/art/video/songs possible, and posting them in the comments of a Porn Battle post (initially on Livejournal, more recently on Dreamwidth). It lasts just over a week, there are always thousands of prompts to work from, and it's a whole lot of fun!
The first ever Porn Battle was in January 2006, and it's been a twice a year event (in January and June/July) ever since.
Other Collections of Interest
Ladies Choice: Women fuck because they like it.
Sharp Teeth: art and stories created for Sharp Teeth, a community devoted to horror.
The FAQ can be found here.
Please check the Porn Battle site for a link to the latest information and rules.