Some people think it's an acronym for 'laughing a whole lot'. These people are idiots. It's actually a more 1337 version of "lol". Using it doesn't mean your laughing, it means you're l337. Unless you use it wrong, in that case you're not.
n00b: lol d00d i just be4t mah hi score for spaec invad0rz, agian!!
Person: lawl, u sux