An expressive way of saying yeah, said to show a relaxed state of being. The word can be used in any relaxed atmosphere, and is always used to agree with someone's idea or behavior. It should never be used in anger, only to be used when it is said relaxed and calm.
If someone asks you "hey do you want to go to see a movie?" You may answer with just "mugf". Instead of saying yea sure that sounds cool.