The letter O is often used when signing correspondence to indicate a hug. Thus signing a letter with XOX would indicate that you are sending the reader "hugs and kisses". The O likely represents the circle formed by a person's arms when hugging someone else.

O, along with X, is also regularly used in the game of noughts and crosses otherwise known as tic-tac-toe.

It is an open debate whether these two uses have anything relation, but the coincidence is quite suggestive.