It depends on context. If someone keeps making one liner funnies in a chat conversation, then I think feedback that you are appreciating their humor is good. It's a substitute for the fact that they cannot hear you or see your face. I suppose that one could try to think of unique ways to tell the other person each time you laughed at something funny that they said, but that would slow down the conversation and be a lot more awkward. And with chat, immediate feedback is helpful, since without it you don't know if the person walked away from the keyboard, or had a stroke, or what until they respond to the last thing that you type. You could just keep saying, "Oh I read that last thing and you're really clever. I'm still here." Or you could say, "Lol!"
It's also a way of letting someone know that a line was meant facetiously or sarcastically instead of deadpan serious without writing "I was being sarcastic just now." That actually makes it a lot less funny than "lol."
In those ways I think it's a useful substitute for things like tone of voice and facial expressions.