Used when describing (often sarcastically or facetiously) the chest of a loli (and therefore its lack of boobs). Does not have to pertain to loli, but nearly always does.
The term is used to describe a loli, and/or specifically her chest. While used humorously, this term is less derisive than loli, or sometimes not at all. It tends to carry tones of infatuation, though usually without sexual lust. When someone uses it, it is always under humorous overtones due to the nature of the word. This light mock of the loli in question can protect the user from trolling, and could still get across that the fact the user is a fan of the particular character, all at once. The term originated on /a/ or /b/, or maybe elsewhere on the interwebs. It is, at any rate, tied forever to animu.
DFC also has become a pseudo-synonym for the Daww aspect originally portrayed by the term loli. This is less true and less relevant than other usages, due to DFC expressing a romantic Do Want.
DFC has become somewhat of a more acceptable yet less-known term for loli. And as such it should stay, if it wants to remain so.