HEy guys, this will be my first Gen Con that I'm attending and I'm organizing things between myself and 5 other friends.  Ideally I want us to be staying at the same hotel probably split between two rooms.  I'm just kinda confused on how the whole 'Hotel lottery' thing works.  Like would it be better for everybody to buy their badges individually so that we have more chances to get rooms, or would it be better to buy all the badges at once and get the 2 required rooms?

Probably best to each buy individually.
It depends on which is your higher priority: getting two rooms in the same hotel, or getting at least one room within walking distance where everyone can leave their heavy stuff.

Each account that purchases any number of badges gets one random place in line to access the hotel booking site. This is what we're calling the "lottery."
Then depending on how many badges you bought, you can reserve up to N/2 rooms (rounded up).

So if 5 people buy their badges individually, they get 5 access times, and then can separately book 5 rooms. If one person buys all 5 badges, they get 1 access time, during which they can book 3 rooms together.

In your situation, you should at least split 3-and-3, to get two chances at 2 rooms. If your group is capable of coordinating in real time, then buy all 6 individually and have the first person wait for the second so they can attempt to book at the same hotel.

Note: the lottery occurs something like 36 hours before the first access times, so you need to have your badges purchased by then.