It was originally part of a series of images of unsettling images with unrelated captions (the other one was a sunken-eyed clown that said "GO TO BED") There was yet another, but I don't remember what it was. Basically, horrifying clowns telling you to go to sleep. But of course, it mutated into something else altogether.
41488p: they care so much about you. it's...touching. *sniff*
Brick: So... That can mean only one thing. JEFF IS A CLOWN. HONK HONK.
41488p: Jeff's...a clown? NO WAY Oo
Brick: Go to *seltzers you in the face*
Wolfenmaus: GO. TO. McDONALDS.
Brick: Okay, but seriously. Jeff is a distorted image of a woman (wearing a bra) with a totally unrelated story added to it years after the image started circulating. Get over it, fangirls.