Used to describe something that is both lame, ridiculous, and/or humorous.
Originally a typo, it was realized that it could also stand in for a word. Lmae is a typo of the word lame, thus the lame half of it. Also, Lmae is spelled very similarly to Lmao (Laughing my ass off). Hence the other half of the definition. To be used casually, as very few are aware of this word.