I would love to write a book called "The Laughter of God" someday. Here it is He who sits in the heavens will laugh. He will have them in dirision, which means in contempt. We've heard the expression 'the last laugh'. God will have both the last Word and the last laugh. God will vex them in his sore displeasure.
This psalm is the first in what is called the Messianic Psalms. It is about God's King Jesus. God says "I have set my King upon my holy hill of Zion." That has not happened yet, but it will according to Revelation 19 & 20. Anything written in the scriptures God looks at as already done. I believe verse seven emphasizes the humanity of Christ and His coming into the world, but it also could mean eternity past as well. God says "I will give thee the heathen for thine inheritance." Those with the wicked imaginations will be broken like the breaking of a clay bowl. For those who will listen, God says be wise. We are the serve the LORD with fear, and with trembling we can rejoice. We are to embrace and kiss the Son, Jesus and blessed are all those that put their trust in Him.