Lol is an acronym which stands for "i dont want you to know that i wasnt playing a bit of attention to what you said so i'm going to pretend like i understood what you said and thought it was funny." The initial initials for this was "IDWYTKTIWPABOATWYSSIGTPLIUWYSATIWF" back in 1955 when the internet was getting popular, but people got tired of typing that and changed it to LOL.
Speculars often ask whether people actually laugh out loud when they type lol or not, and want to find the percentage and every little thing possible about it, but in the minds of many teenagers and so forth, no one cares about that crap. It doesn't matter. People can do what they want, when they want. As long as no one finds out.
Teachers may discriminate against students if they say "lol" out loud, as some say it as a word, some as an acronym, and sometimes teachers call the police, who automatically start things out by handcuffing the students and locking them up in prison.
Lol is commonly used as a category for other words such as "STFU" or "OMG".