In the Middle Ages, a fool was a clown or jester. Today, fools are simply silly people who clown around or lack common sense.
The original fools were clowns hired by the king for entertainment. They were actually witty and smart, but today's fools are not. When you call someone a fool, you either mean he's gullible or just a run-of-the-mill idiot. To fool also means to play a trick or hoax on someone, and fooling around is carelessly spending time on something silly. If someone doesn't believe something you said, you might defend yourself by saying, "I'm not fooling!"