It means "Laughing My Ass Off" - similar to LOL (Laughing Out Loud) and ROFL (Rolling On the Floor Laughing)

Laughing My Ass Off

LMAO=Laughing my ''rear back'' off! LMFAO=Laughing my ''freaking rear back'' off:)

https://piers.wyo.gov/zux/video-k-v-r1.html https://piers.wyo.gov/zux/video-k-v-r2.html