A variation of lol. Other variations include more "ol". Used to represent lots of laughter, the more "ol", the funnier. Often looked down on by big headed people who take internet chat rooms and iRC too seriously. People often belittle those who use this and its variations because they have a superiority complex.
"lolol, how funny."
"Wow! The very same thing happened to me the other day! LOLOL!"