That's a question we've all asked at one time or another.
LOL = Laugh Out Loud.
In other words, it means that if you were talking to the person you likely would have chuckled or laughed at their comment. Typically its one of the first abreviations you'll ever use is a chat or forum, so much so that this face:

is created by using it!
A LOL Machine? Well I guess you'll need to figure that one out yourself.
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Brian Myers
Architectural Applications Specialist
Seiler Instrument, St Louis Missouri
The stuff that dreams are made of. - The Maltese Falcon, 1941