Yeah, literally. It's an actual compliment for when something truly made you laugh. The bar for making me type 'LOL' is pretty low, especially when compared to what it takes to actually make me laugh reading something on the computer screen. I think Reich invented it long ago.

I really dislike that "figuratively" has come to be one of the meanings of "literally".

I actually go the other way. It used to bug the crap out of me but now I'm a fan because it affords me many opportunities to be subtly rude to people.

For example:
Loser: "I was so mad, there was literally steam coming out of my ears!"
asm (credulously): "Oh my gosh! There was steam coming of your ears? Really? Did you visit a doctor?"
Loser: "... No... not literally."
asm: "Oh. So not literally, then."
Loser: "Whatever dude."
asm: [laughs to self]

asm - that was so funny I literally fell of my chair. Now I have to go see a doctor, thanks.

People actually use literally in that context? Why?

Because they're dumb.

Vataro wrote: literally? luxuriously? ludicrously? I'm out of the loop on that one.

literally. its used to distinguish between the usual figurative use of "LOL", which people use almost recklessly -- sometimes to signify a chuckle, sometimes just to acknowledge that something was clever, or even an indication of nervousness or self-consciousness. "LLOL" means that, without a doubt, you were literally laughing out loud.

its sad that this conversation exists. cosmically sad.

also,

http://xkcd.com/725/