While it originally meant someone was actually laughing loudly, it's now often used more casually to express amusement, even if the person isn't actually laughing out loud.
Here are some examples of how "lol" is used:
* "That joke was hilarious, lol!"
* "I can't believe you said that, lol."
* "I'm so tired, lol." (Used more casually to express amusement)