The emoticon, a portmanteau of Emotion Iconization or Emotion Icons, an emoticon, also called a smiley or smiley face, started life off as a sequence of ordinary printable ascii characters, or a small image, intended to represent a human facial expression and convey an emotion. Smiley Faces are a form of paralanguage commonly used as extended interpunction symbols in e-mail, online chat, bulletin boards, instant messaging and Internet forums; without them simple statements could be easily misinterpreted.
Around about 1981, Scott Fahlman (now a Principal Research Scientist in the School of Computer Science at Carnegie Mellon University), came up with a scheme for encoding and conveying one's feelings in small text "glyphs" to overcome this frustration.
According to popular etymology, the emoticon, is a a combination of emotion and icon. The verticon (from vertical and icon), is often used when referring to the East Asian style of emoticon.
In the common ascii smiley :-) the colon represents the eyes, the bracket for the mouth and the hyphen is for the nose.
Since Scott's idea in the early 80's the ascii emoticons have evolved and many variations exist all imparting some level of emotion in a textual medium. As HTML evolved to include graphics someone came up with the idea of using the traditional graphic smiley face that could be used on internet forums around the world, the level of detail added in these smileys is often quite remarkable and can show complicated but repeatable animations.