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According to CNN, Carnegie Mellon professor Scott E. Fahlman was the first to use the 🙂 in a computer message.
Fahlman posted the emoticon in a message to an online electronic bulletin board at 11:44 a.m. on September 19, 1982, during a discussion about the limits of online humor and how to denote comments meant to be taken lightly. “I propose the following character sequence for joke markers: :-),” wrote Fahlman. “Read it sideways.”
Later in the article, Amy Weinberg, a University of Maryland linguist and computer scientist, is quoted:
“you have a sentence that says ‘I love my boss’ and then there’s a smiley face, you better not take that seriously.”
I dunno. I always think of the smiley face as just meaning you’re happy. If someone had a sentence that said “I love my boss. :-)” I would think that person just really likes their boss and is happy. Maybe I’m too gullible or optimistic. Now the winking face would be for jokes or ironic humor. Anyways, hooray for the smiley emoticon! 🙂

I’ve seen people use the smiley face emoticon to help keep a conversation casual. They’ll be on their soapbox about something and they will insert the smiley face to make the point in a friendly manner. The problem with communicating via email is that a discussion that’s held in person will have a completely different feel when had over email. Email tends to make conversations more serious and cold. The emoticon is an attempt to casualize that experience.
Thanks to Dave and Kelly for informing me about this AP article. 🙂 Moose, you should have written that CNN article, cuz you explain the cultural meaning of the emoticon much better than AP.