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We all know that it stands for "Laugh(ing) out loud" but that's not what it means anymore.

"Lol" is what's called a pragmatic particle of speech, or a discourse marker.
It serves to set the tone of a message, usually on [the internet]. When speaking to someone, they listen to your [voice] and perceive a positive or negative tone. When reading text, there is no tone to perceive so "lol" goes at the beginning or end of a sentence to ease any tension in a [conversation].

Take for example a converstation in which you call your friend a shithead on Instagram. If you just say "You shithead." They might perceive you to be mad or they'll take offense. If you say "lol you shithead" then they're likely to understand that you're not serious.

Other examples of discourse markers include

-wow
-oh
-um
-well
-uh
-so
etc...

"lol" can also be used to signal to someone that you found something they said or shared to be humorous or funny. This is more in line with the original "lol" meaning "[laughing out loud]" although a person who replies "lol" almost never actually laughs out loud.

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