It means to laugh so much you literally wet yourself by urinating in your pant.
A similar expression is "It was so funny I nearly wet myself"
Also "piss" can cause confusion between the English and the Americans.
In English, "I'm so pissed" means I am very drunk.
In American "I'm so pissed" means I am very angry!!
In English you have to add "off" to mean angry, ie
"I'm so pissed off"=I am very angry/upset"
There are a few words which have different meanings to American and British people, often resulting in humour, in the USA "fag" generally means homosexual, but in the UK "fag" usually means a cigarette, but it can mean a homosexual depending on usage.
So an English man might say " I could do with a fag right now" meaning he wants a cigarette, but to an American he might think he wants a homosexual!!
Also the words bum and fanny have different meanings!!
In English bum means ass (bottom behind) but usually a tramp or vagrant in USA.
Also Fanny means ass (bottom, behind) to an American but in England it means a woman's vagina!!
So the USA expression "big fanny" is very funny to the English!!!
It must be a confusing language to learn, but fortunately I am English