I started writing 50-word stories in a thread on the Penny Arcade forums, back in early 2008. The thread is still there. You will find many of the initial stories posted on this blog were originally posted there.
Writing good 50-word stories is a great writing exercise: it forces you to only keep the words that absolutely need to be there, cutting out all the fluff. It forces you to get to the point much sooner. A lot of long-winded writers could benefit from this exercise.
Not to mention, it’s so much fun!