This alternative expression for 'lol' was invented and popularised by Australian comedians Anna+Mae. It's an acronym, with the letters meaning respectively: "Laughing Almost Manically so Everyone Stares", and is generally used during IM conversations to indicate that one is laughing so much as to attract the attention of anyone in the vicinity.
As stipulated by Anna+Mae during their 2009 show "mirror", LAMES is only to be used in situations of genuine hilarity.
during an IM conversation:
A: "Hey, check out this youtube link."
A: "I know isn't it hilarious???"
L: "Yes!!! But now everyone is staring at me cause I'm at an internet cafe and just laughed really loudly :("