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1.
Either used when something is ridiculously funny and you can barely breathe, or stupidly tragic.

Either of these is correct.
Girl: *sees something hilarious* HAHAHAHA WHAT IS LIFE?!

Boy: I haven't left the house all week, I've been on Tumblr all week and have only moved to pee, sleep and eat, what is life?!
von Tonight make me unstoppable 28. Oktober 2010
 
2.
A phrase that is used when something completely upsetting, shocking, and mind-numbing occurs that questions the meaning of your existence and the existence of everything else.

Can also be used when you are speechless and there are no words to describe your thoughts.
Friend 1: She applied to 18 schools and she didn't get into ANY. And she has a 95 average.

Friend 2:.......WHAT IS LIFE?!?!?!

-------OR---------

Boy: Someone robbed my house then set it on fire......
WHAT IS LIFE?.
von lalala29 16. Juli 2011