Nobody fakes a Texas accent like Connie Britton. Maxwell posted this, and I'm stealing it.
I know "y'all" has taken off in the national lexicon thanks to the adoption in hip-hop, but it was a Southern thing. At that, when I was a kid and everyone was a transplant, we were being taught not to say "y'all" in school as it supposedly made us look a bit hill-billyish. It did not stick.
"Y'all" is a highly functional word, and anyone who lives in Texas knows the many, many meanings of the word (as demonstrated above by Ms. Tami Taylor). Yup, it's from "You all", which up north, I guess is "You guys". But it tends to pepper the conversation quite a bit more as a friendly, informal manner of address, and is used to warm up formal situations.
By the way, you hear people imitating Texans saying "y'all" to a single individual. This is incorrect. If "y'all" is said to an individual, say, over the phone, you should assume they have just asked about either everyone in your immediate vicinity ("Are y'all about to leave?") or your entire family or household ("what are y'all up to this weekend?"). It's a form of address to large crowds ("Y'all, I need your attention.") and a way of expressing despair ("Aw, y'all...").
A warning to those not from below the Mason-Dixon line: if you ever hear the phrase "f-bomb all y'all", something has gone very wrong, indeed, with the Texan with whom you are conversing. You can assume the famous Southern hospitality has just been dropped for that famous Southern hostility.