To translate, it says laowai is a colloquial term for foreigners, similar to nicknames such as laozhang and laowang. The word lao is added to sound friendly. In the past, Chinese used terms that address foreigners as third persons, the term laowai can be used on a second person.
Laowai is a commonly used Chinese mandarin word. It is the shortened, informal version close to wàiguórén 外国人 ("foreigner"), a better translation of Laowai would be "alien"... So Laowai 老外 is more of a neutral term which can be used as: "an obvious foreigner", "very exotic", or "adventive", "alien".
Based on the above, there are two lines of thought: one saying that 老 is added as an indication of friendliness to foreigners; another saying that 老 is added to indicate that a foreigner is "always" an outsider.
Does anyone know the exact origin of this term?