Have you ever imagined God sitting in heaven laughing at you? I have of course but it was always a gentle chuckle: like when my kids do something cute and ridiculous and I can't help but snicker. I'd prefer He laugh when I'm boneheaded than cry!
But when the Psalmist says that God laughed, he didn't have a delighted guffaw in mind, but a snort of derision. As the 2nd Psalm opens, the nations and their leaders are plotting open revolt. Tired of the ties that bind them to God their Emperor, they are ready for freedom. But they had no idea who they were messing with.
God laughed down at the nations because while they were plotting rebellion, he was plotting to send Jesus. His own son would not only be his personal emissary but the King in person ready to judge the nations.