If two people love each other, then fall out (because of an argument or other reason), then there *was* love lost between them.  But if two people *don't care* much for each other, then have a falling out, then there really was *no love lost* between them.

Interestingly, when it was originated in the 1500s, until about 1800, it could indicate either [*extreme love* or *extreme hate.*](http://dictionary.reference.com/browse/no+love+lost) 

*Extreme love* (the image is of love shared in a common vessel; when affection was mutual, none of the love in the vessel was lost): 

>- Sore sicke he was, and like to dye,  
No helpe his life could save;  
His wife by him as sicke did lye,  
And both possest one grave.   
No love between these two was lost,   
Each was to other kinde;    
In love they liv'd, in love they dyed,   
And left two babes behinde." - [Reliques of Ancient English Poetry, 1765](https://archive.org/stream/childreninwood00harviala/childreninwood00harviala_djvu.txt)   
<sup><sub>You can tell it's from some time ago; the two innocent children die in the woods!</sup></sub>

Here, Manville, a gentleman, loves a peasants daughter, Em. Em speaks of him:
  
>- And never could I see a man, methought,  
That equaled Manville in my partial eye.  
*Nor was there any love between us lost*,  
But that I held the same in high regard, . - Faire Em, (a fraudulent Shakespeare) -  Act V, Sc. I (1592)

*Extreme ill-will*
>"There's no love lost," quote Sancho, "for she speaks ill of me too when she list." - Don Quixote. 1620 translation 

Today, however, the term signifies [**ill will exclusively**](http://www.phrases.org.uk/bulletin_board/13/messages/246.html). If there is no love lost between two people, they have a strong enmity towards or hate for the other and make no effort to conceal it.

>He needs her appearance of moral integrity, and she needs his iron to end all argument about her unity and purity. It is a marriage of convenience, a strained relationship, *with [no love lost](http://twelvetribes.org/publications/dream-colossus) between them*. For both, the hope of world dominion is worth the tension.