'lmao' is an Internet slang, meaning laughing my ass off. It is not considered an 'official' word, and can be associated with the words 'lol' and 'rofl'. It is generally known as a stronger version of 'laughing out loud'
"Laughing My Ass Off". Used online to show you find something really funny or are laughing at it alot. Starting to be used in real life when they find something "El-EM-AE-OH!".
JESS: I left the house today with a pair of old pants stuck to my shoe :(
Angela: LMAO! No way..