Yes it is a good thing when your floof o meter goes up. It means someone is grateful for your kindness or help. Users often reward other users with a nuzzle for good reasons as the others here have explained. Although I will point out that it doesn't reflect exactly how good or helpful a person is though so even if a person doesn't have so much it doesn't mean they are any less helpful or kind then say some user that might have it higher. It's just like likes on Facebook, in the end it's just a number.
