The roots of the term are somewhat obfuscated (probably as it was made up on the fly). The implication is of a furry hug and nuzzle. Usually used in "virtual" sense, though, where physical contact isn't possible.
Not sexual, just friendly.
Also available in a number of flavours, such as the "warm fuzzle".
Fuz"zle (?), v. t. [Cf. LG. fuseln to drink common liquor, fr. fusel bad liquor.]
To make drunk; to intoxicate; to fuddle.
© Webster 1913.
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