Explanation needed

[𝗠𝗞𝗖]

What exactly is this image trying to convey? I've seen it likely several hundred times, yet I'm still unable to understand its meaning.
I have a few interpretations:

1. He WAS laughing and then he stopped, maybe because he heard something shocking
2. He's neutral but laughing in his head
3. He's laughing and appalled at the same time (this one being based on how it's typically used).

I'm a bit dim so any help would be appreciated.

 

[KKKracka]

Cob is often seen as a stoic, a man not carrying much emotion in his face, however he still has a sense of humor, and laughs on the inside.

 

[istanbul]

he's being haunted by a ghost