I have seen these icons coming in front of sms messages and in contact list. What they stand for?
These icons are just like a "clock"
The icon refers to that contact's "availability":
Green: Available. You are online and ready to chat.
Yellow: Idle. Your status automatically changes to idle when
you're away from your computer for 15
minutes. You can't manually select to
Red: Busy. This lets your contacts know you're busy and don't want to be
Grey: Signed out of chat, or Invisible. If you set your status to
Invisible, you'll appear to be signed
out of chat even when you're actually
Source: Google Chat support answer
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