Green’s Dictionary of Slang

1. anything very simple to do or understand.

1924		(con. WWI) A.G. Pretty Gloss. of Sl. [...] in the A.I.F. 1921–1924 (rev. t/s) n.p.: lolly. Something easy; a person easy to trick or overcome.
1941		Baker Popular Dict. Aus. Sl.
1955		N. Pulliam I Travelled a Lonely Land (1957) 235/2: lolly – [...] something easy to do.

2. a fool, a dupe.

1924		see sense 1.
1935		A.J. Pollock Und. Speaks.
1945		Baker Aus. Lang. 130: Fools of one kind and another [...] lolly, dilpot, dolly pot, gaylo, drip, flathead, possum, gammy, gazob, gimp and gup.
1999		G. Seal Lingo 50: Terms for a mug [...] include alec, dill (long since promoted to the greater Lingo as a term for a fool); sim; lolly and the accurate bunny.