'imao' has crept into everyday language, formally used as text speak, you can now see these four letters on forums everywhere. So, what does it mean? It means 'In My Arrogant Opinion'. Arrogance is not a good quality and basically means, I'm right, you're wrong'. imao it should not be used.
On another level IMAO is a right wing blog that discusses politics in a humorous way, purely because they think that politics is funny.