Currently? I'm in love with a guy in New Jersey (I'm in Ohio - not that far!). Been "with" him for a year this past Halloween. Haven't met him face-to-face yet, but I've talked to him on the phone and we write each other notes via webcam and digital camera. I don't really care what anyone thinks about the relationship, because I'm head-over-heels ;P
My friends don't know he exists yet, but they will eventually. They're not really the most open-minded when it comes to this sort of thing. I don't really care though; none of his friends know about me and we're perfectly fine with that.
I also have a ton of online friends. Honestly, I prefer them to the friends I have "in real life." I'm kind of antisocial and shy, and, strangely, it's a lot easier for me to open up online. People I know and see every day seem to think I'm detached and distant. I'm like, "Pfft, whatevs man."
There's always the possibility that a person you talk to is a creepy old man who wants to rape you, so you need to be careful. Personally, I think webcams are great for that whole "identity" thing, although it could really be faked too (someone getting a young friend to pose as them), though I think that's kind of unlikely.
I've always thought that internet dating was great: You could meet people who had no idea what you looked like, so they'd like you for YOU and not your appearance. Nowadays, everyone has a digital camera, so lack of pic has kind of gone out of the whole equation, but you can still meet great people.