Punching snakes is any sort of meaningless activity one suffers in a video game in order to get to the good stuff. It can be grinding in a massively-multiplayer-online game, building up your forces in a real-time-strategy game, or working your way through tough sequences in a first person shooter over and over again until you finally get past them. Punching snakes is any activity that becomes so frustratingly repetitive as to make you want to put the game down altogether.
In the original EverQuest you started the game with nothing other than a shirt and a pouch for storing loot, and began by killing low-level monsters outside your starting city. You had no weapons so you had to punch the monsters, and snakes were a common low-level monster outside all the noob zones in the game.
When you die in EverQuest all your gear and loot remains on your corpse. To get your stuff back you have to fetch your corpse after you respawn. We called that doing a corpse run. And your corpse, and all the items that were on the corpse, would vanish after a certain amount of time. When you were a low-level character that corpse could be carrying everything you owned.
It was easy to forget where your corpse was, or to wander into a high-level zone by accident where you'd get killed once, and then get killed again every single time you tried to make your corpse run. And if you couldn't get any help with either problem your corpse would vanish and you'd have to start your character all over again with just the shirt and the pouch you spawned with.
My friend logs into EverQuest one day, sees his buddy online and asks what he's up to. His buddy dejectedly answers "Punching snakes," i.e. he lost his corpse and had to start all over again.
In a good video game we should never find ourselves punching snakes.
Greater Faydark image courtesy of Allakhazam