Answer:
   
   The customary Jewish head covering (for simplicity, we'll call it a
   kipa (singular of kipot), although all the terms refer to
   approximately the same thing) is a sign of humility for men,
   acknowledging what's "above" us (G-d). An additional explanation is
   that in ancient Rome, servants were required to cover their heads
   while free men did not; thus, Jews covered their heads to show that
   they were servants of G-d. It's necessary for men to cover their heads
   during certain prayers (whether it be by a kipa or another
   headcovering), and for one making blessings all day, it's inconvenient
   to keep donning and removing a kipa. In some places, the type of kipa
   and way of wearing it expresses affiliation with a particular yeshiva
   or political viewpoint. In other places, it doesn't really matter.
   
   Many Ashkenazi rabbis acknowledge that wearing a head covering at all
   times was once considered an optional "midat chasidut" [pious act] but
   that nowadays, full-time head covering is the norm except under
   extenuating circumstances.
   
   Sephardic communities generally did not have the custom of wearing a
   kipa all the time.
   
   Some diaspora Jews leave off the kipa at school, work, or when
   testifying in court, because of real danger or uneasiness in appearing
   in the secular world with an obvious symbol of Jewishness.
   
   Many non-Orthodox Jews (and some modern Orthodox Jews) do not always
   wear a kipa. This is because some sources make covering the head by a
   Jewish male a special practice of the pious (midat chasidut). However,
   these movements do recognize that it is a Jewish way of showing
   reference and respect, as well as a positive means of identification
   (which can serve as a barrier against assimilation). Some movements
   have specific recommendations as to the time that a kipa is worn; for
   example, Conservative practice is to cover the head in the following
   situations:
     * Whenever in the sanctuary of a synagogue.
     * When praying and when studying or reading from sacred literature.
     * Whenever performing any ritual.
     * When eating, since eating is always followed by a benediction.
       Some follow the minhag of certain Jewish communities in Germany
       where they cover their heads during the blessing before the meal
       and during the benedictions after the meal, but not during the
       meal itself.
       
   In Israel wearing a kipa also has a social significance. While wearing
   a kipa shows that you are somewhat religious, not-wearing one is like
   stating "I'm not religious". The style of kipa in Israel can also
   indicate political and religious affiliations.
   
   The wearing of the kipah at school and work has increased in recent
   years. These are also affectionately called "beanies," "holy
   headgear," "Yamahas," "Yid-lids," and "Kapeles." (Similarly, some hair
   coverings for married women are affectionately called "shmattehs.")
   
   On Usenet, some related, but not necessarily common, "Jewish" smilies
   might be:
   
   (;;:-)
          Clean-shaven smiley wearing a kipa
          
   @:-)
          Modest married smiley wearing snood/beret
          
   {:-)
          Modest married smiley wearing sheitel (wig)
          
   [|:-)}
          Smiley wearing black fedora and short beard
          
   {|B-)==
          Smiley wearing glasses, streimel (fur hat), and long beard
          
   (;{8-{)}
          Smiling bearded guy with (most of) his own hair and a kipa
          
   :---)
          Antisemitic long-nosed smiley
          
   From whence does the term originate? The word yarmulke is Yiddish.
   According to Leo Rosten's The Joys of Yiddish, it comes from a Tartar
   word meaning skullcap. Some rabbis claim it comes from the Aramaic
   words "yerai malka" (fear of or respect for The King). The Hebrew word
   for this head covering is kippah or kipa (pronounced key-pah).