Long version (Short version below)
Warning GREAT WALL OF T3X7
So... Here is an amazing short story about how, I, crush (Get crushed by) everyone in a free for all with 7 people (Including me).
After patching my game yesterday, I decided a short while ago to take another swing at multiplayer.
I logged on with no problem, joined a game, and wolla! I was playing a multiplayer match as the TEC. Really early on the most peculiar thing happened to me, some guy quickly offered a cease fire, planet view, the whole shobang. At first I was a bit skeptical, but I quickly realized that without help I would die quickly. I colonized a few worlds and my allies' ship vision gave me sight over most of the system. That is when... Things went horrifyingly wrong. I noticed another player (A vassari) near my border, but I paid little attention to it. I was too busy focused on snatching a sexy ice world that was a valuable choke point. It didn't take long for this other player to quickly move closer to me. He had colonized an asteroid right next one of my worlds. 
I became uncomfortable with this rather ambitious neighbor, and elected to build frigates (Remember the game was still really young) on that world just in case. The worst happened, my weird tech (I believe it be called Phsidir or something) that shows enemy movement on the phase lanes leading to your worlds, detected a capital ship. Shortly afterwards it detected several vassari frigates. I only had a few frigates on that worlds, because frigate production was just starting to heat up.
I swiftly ordered the fleet that was conquering that sexy ice world to assist the my besieged world. They were several phase lanes away, several phase lanes too late. Instead of ordering my frigates to flee I foolishly ordered them to stand and fight. I can still hear their voices in my head, "Oh great, our leader is a retard!" My phsidir (Whatever it is called) detected more enemy frigates. They just kept coming.
By the time my main fleet (1 capital and 6 frigates) arrived I only had around 4 frigates left. "Crap." I finally came to my senses and ordered a retreat, a retreat to my homeworld, which was right next door. The whole time more enemy ships were heading to that system. I quickly built a few more frigates at my homeworld, but I knew I would not last. At the sight of enemy ships heading towards my homeworld, I ordered a retreat all the way to ally territory. I would be far enough to rebuild, but the journey would be dangerous.
While the enemy would pursue me, only as far as one of my ice worlds, my homeworld had a phase lane leading to an asteroid. I built 3 frig factories and began pumping out frigs. My plan was not to fight to the death, but to flee with this stronger fleet to friendly shores. I managed to flee and my enemy decided to bomb my worlds over chasing me around. I ordered my new fleet to flee at the sight of enemy assailiants coming.
They fled and eventually met up with my other fleet. My combined fleets had almost conquered a neutral world when I was defeated. All of my worlds had been conquered. But wait at the same time of my defeat I had gained a world. "Crap!" I just lost, but yet I have not. Because I was defeated I had no control over this world.
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Short version
I was getting spanked.
I had fled with my fleet across the system all the way to friendly territory.
I lost all of my worlds, but... As soon as I lost a world I gained another (One that I had been conquering). The defeat screen came up to laugh at the irony. I chose "keep playing" to see what had happened. My empire had 1 world left, but because of my defeat I had no control over it or my ships.
