"LOL" stands for "laughing out loud." While the exact origin of the term is unknown, it was first documented as a popular online term in 1989.
Although the literal meaning of LOL states that the person using it is actually laughing, most definitions do not require actual laughter. The term is used in the context of humorous statements or as a reaction, but it's also used as an icebreaker to denote a casual tone.
People from non-English-speaking countries sometimes use LOL but also use different terms with a similar meaning. In Thailand, for example, people sometimes use "555" to indicate laughter, as the number five is pronounced "ha."