Lawlcaking is an action done in a special high called phamtasm. While lawlcaking, one starts laughing uncontrollably and has an irresistable craving for cake, red velvet in particular. Lawlcaking can be fatal, as laughing uncontrollably can stop your breathing.
Person 1: *laughing* I need red velvet cake!
Person 2: Are you high.
Person 1: *still laughing* Yes.
Person 2: You must be lawlcaking!
Person 1: *laughing* *stops breathing* *dies*
It means, "laugh out loud cakes." Now, some people like to say "lolpie," but that is incorrect. Lolcakes is more grammatically correct, and is used in everyday language more often.