Actually Literally Laughing Out Loud not just saying so by typing LOL in a text, instant message, chat or the like. Literally loling is usually accompanied by a big Kool-Aid smile that lasts anywhere from a few seconds to several minutes after initial literal laughter subsides or is otherwise contained in order to avoid questions like "whats so funny?" from annoying ease droppers in close proximity or around the vicinity of said loler.
Literally loling takes extra effort to type and conveys to others that lol is not just being used as a sentence-filler by someone lazy or pretending to be amused and therefore should be used sparingly for those true lol moments.
Furthermore, it's use can expand past type/text scenarios when describing a literal lol moment.
K-rizztxt: So how was Vegas?
Metxt: OMG! At TAO, I was dance raped by a Puerto Rican midget chic from New York while her husband was snappin photos saying, "What happens in Vegas baby!" True story!
K-rizztxt: Woah dude! I'm literally loling! I wanna see the pics!
later that day (in a non-textversation)...
Kristi: Dude, you can't send messages like that while I'm at work! I was literally loling and was asked "whats so funny" by my obnoxious cubemate.
Me: Who cares check out the pix on my facespace!!! It was such a the hangover kind of weekend!
Kristi: Sounds like it, if you didn't have proof I'd think you'd pirated it from TFLN.