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Failsubs refers to translate fallacies, subtitle jokes or humorous sub animations made by the anime translators. This jokes are not limited to but includes descripted noises, engrish or funny translator side notes.
Fansubbed anime (and by extension, failsubs) began surfacing in the Western world in the 1980’s, when anime was starting to boom. Enthusiasts with some proficiency in the Japanese language began to subtitle anime that hadn’t been subbed officially yet so that they could share them with non-Japanese speaking fans. These fansubs were done mostly on VHS/Betamax, were terribly expensive to produce, and were of notoriously low quality.
Here are some of the many versions of LOLFansubs, and how they’re discussed:
(see images for examples)
Sometimes LOL fansubs have the correct translations, to an extent; and even though the words are correct, awkward moments are still humorous because of how something’s translated. Also, some awkward moments aren’t awkward in context but, when taken out of context, they can be exploited.
The point of having a ’Translator’s note’ is to explain different stuff that the audience might not follow in an anime due to cultural differences, or to try to explain any confusing scenes that may happen. Of course, due to their free rein, the fansubber can also note their own opinions about the given scene, which usually results in humor.
However- some subbers tend to use the translator’s note as a sort of pop-up dictionary. This usually results in the audience wondering, “Why wouldn’t they just translate it like that?”, but still provide a lot of background that would be missed by non-Japanese viewers. Certain translator’s notes are so long, they can even screen the scene with information, whereas, on the opposite end of the spectrum, there are some that just reveal how dim the fansubbers are.
Some words don’t have a direct translation in the English language and are instead transcribed. This includes (but, of course, isn’t limited to): Nakama (comrades), Ojou-sama (mistress), itadakimasu (let’s eat) etc.
On a similar note, ‘honorifics’, while very important in Japan, don’t matter as much in other parts of the world. Take ‘san’ for example. ‘-san’ is just a respectful way of addressing a name, much like how one would say “Mister”, or “Miss/Missus” in English, but again, it isn’t really necessary. This means the Western(/International) audience wouldn’t mind if the ‘-san’ is omitted unless necessary, as it’s understood. Unfortunately, some pedantic fansubbers still transcribe the honorifics like they’re very deep/important to the plot resulting in a somewhat ridiculous scene.
Out of context/lost in translation
It can be quite difficult to translate the Japanese language as some words may have two meanings, like a slang word, phrase, or pun. As a result, just one incorrectly translated word can destroy the whole context/point of the scene. Sometimes, subs are because they can deviate from what is happening in the scene. Alternatively, the fansubber may translate something wrong perfectly into a scene, it becomes hilarious. Another reoccurring failsub happens when a subber states something that’s so obvious, it’s borders on ridiculousness.
“I have no idea what s/he said here”
Not all fansubbers are fluent in Japanese. There are some instances where they don’t even know what the scene is depicting. As a result, they will admit that they don’t have a clue, often to the audience’s delight. These occur most often in characters who become very excited, and talk rapidly.
Fansubbers will occasionally put emoticons in their subtitles for their (and often the audience’s) humor. Doing so sometimes will destroy the scene’s mood… Inciting anger (and some laughter) from the viewer.
Fansubbers are human. They can/will make mistakes every now and then, and will overlook it. As can be expected, most netizens will screencap the most epic of mistakes that the fansubbers can do. These can include grammar, spelling, conjugation, counting, etc. 
Some fansubbers will deliberately set up things that are subtly similar to another show. They will even go so far as to include memes.
People die if they are killed
"People Die If They Are Killed" is one of the most well-known Failsubs taken from the anime version of Fate/Stay Night. In this anime, the main character Shirou wonders why he survived even with the most gruesome and painful of wounds. Upon realizing has the ‘Avalon’ inside him, he thinks that it’s morally wrong to be immortal, which leads to…
All According to Keikaku
Am I kawaii, Uguu~! | Translator’s note: Kawaii means cute
"Am I Kawaii" is a recurring image that is notable as a failsub as it has has a redundancy similar to “Just According to Keikaku”. While it’s more related to QUALITY, this failsub is spreading rapidly. It originated from the anime Kanon (See also: ~Uguu), and can be seen (as an example) in the original What’s All This Racket? rage comic.
DO NOT WANT
"Do Not Want" started out from a bootleg version of the movie “Star Wars”, where Chinese subtitlers directly translated the from the Chinese version rather than transcribing it from the original (English) movie dub itself. As you can imagine, the result was spectacularly bad.