It's really supposed to be a cute kitty. I use it when I think something is adorable, and it also is a good emoticon when you annoy someone. Like if they say "Come on! Why did you do that?" you can just reply with "You know why :3" Or something like that. I'm not good at being funny.
Well its a good thing I read the other answers on here. I was thinking it meant that a dude had been kicked so hard in the_____s that they "got out of the bag" to put it delicately. Whew! Glad that got straightened out.