They were obviously Mafia. Matt didn't need a horse's head in his bed to know that.
It Matters, chapter 3: Blood and Guts
In 'The Godfather', both the book by Mario Puzo and the film directed by Francis Coppola, the Mafia don persuades a Hollywood mogul to take on his godson - a fading crooner - by putting a horse's head in the man's bed while he sleeps. The horse was the man's prized racehorse and the implication was that he should agree to this deal or he would be next.
"Which is I'm supposed to be on-line at 2am... friend from America has a skillcape party in..."
It Matters, chapter 4: Weaknesses
In the MMORPG game, Runescape, gaining level 99 in any skill earns the player the right to buy a skillcape. All level 99 are extremely time-consuming and repetitive and also cost a lot of gold pieces, the in-game currency. Therefore anyone wearing a skillcape has earned it and it is seen as a symbol of prestige. It's achievement is worthy of celebrating with in-game friends usually joining the player in an in-game party.
"Are you familiar with hothouses?"
Matt blinked. Every sinew and nerve was on red alert, as the planned agenda was derailed so early on. At times like this, he fell
back on flippancy or sarcasm. "Yes. I grew up in one."
Johan and Matt, It Matters, chapter 6: Hothouse
A hothouse is a building, much like a larger scale greenhouse, where flora is intensively grown. Because conditions are kept optimal for them, they can grow much bigger than their counterparts in more natural conditions. Matt's reference is to Wammy's House, where child geniuses are pushed to their intellectual limits (and sometimes, unfortunately, beyond them).
Everyone froze. Matt nodded calmly, his cigarette bobbing in his mouth, "We've reached what I think is commonly referred to
as an impasse." He smirked. "A Sub7, by the way, is a kind of bomb. We're all going to die anyway."
Matt, It Matters, chapter 6: Hothouse
Matt lies. A Sub7 is a Trojan. Trojans, in the context of computing, come in many shapes and sizes, with the intention of inserting something unseen into the hard-drive of a computer. Once activated, they can release a virus to damage the hard-drive or it can cause information to be sent to a remote recipient. The Sub7 variety traditionally allows remote access to the computer. In this case, Matt could have gone home to Mello and activated his Sub7 on Johan's computer. It wouldn't matter what Johan did with his keyboard and mouse, Matt would be over-riding it his end. He could also silently watch, while Johan unwitting used his computer. However, it's highly unlikely that a Sub7 could turn the computer into a bomb.
"This is like going to God Wars in just bronze... and forgetting your Sara brews and PPs."
Matt, It Matters, chapter 12: Tripartate
This is another Runescape reference. The God Wars is one of the harshest battlegrounds within the game. Bronze is the lowest level armour. It is unlikely that a player would survive the outskirts long enough to get into the God Wars in just bronze armour. The game also allows for potions, which assist the character's immunity to attack. The Saradomin Brews raise hitpoints and defence levels, at the expense of lowered strength, attack, magic and range levels. However, they are the fastest item to secure a character that is in danger. Prayer levels allow for a variety of boosts, for example, protect from melee can stop most creatures being able to melee attack a character. Even those able to hit through it find their attacks much reduced. The prayer only lasts as long as the prayer level point. Prayer Potions, or PPs, boost the points and thus prolong the defense.
Matt is comparing attempting to intellectually beat Mello to going to the God Wars in circumstances that will inevitably lead to his Runescape character being killed.
Half an hour dripped by, infinitely slowly, but still too fast for Mello. He doubted that he'd ever been this patient and
immobile in his life, but it did feel like a pause in the Armageddon of their existence.
Matt, It Matters, chapter 13: Cleansed
Armageddon is the end of times in Christian mythology. It denotes a final battle between God and Satan. Mello is pondering that his and Matt's lives feel like an epic war leading to the end of the world.
"You should also know that I've released a DoS."
Matt, It Matters, chapter 15: The Mario Clause
A Denial of Service, or DoS, does what it says on the packet. It's a Trojan which, once activated inside a computer's hard-drive, will shut down anything that it is programmed to do. This can range from the whole computer to a function in a piece of software. Matt is saying that he could shut down the entire of the computerised Watari Network, which includes both Wammy's House and Near's systems.