'lol' is used as an abbreviation for 'laugh out loud' or' lots of love'. The latter is a common way for native speakers to close a message to friends or family. It has become very popular in text messaging and chat as have many others abbreviations, but I've never heard it spoken. See text messaging and chat abbreviations on www.webopedia.com

In fact people who speak English don't like to use it that much as you think they would like.

lol means laughing out loud.when someone uses it,he should be very happy and willing to talk with you.

It is an Internet only phrase to add color and feeling to an online conversation. Although recently LOL is being used more and more in real life conversations. It is a way to relieve pressure on a conversation to make it less serious.

It's the short term of "laugh out loud".