This acronym is the wholesome version of the secular LMAO.
The alteration to LMAO was likely made in observation of Ephesians 4:29 which says “Do not let any unwholesome talk come out of your mouths, but only what is helpful for building others up according to their needs, that it may benefit those who listen.”
The logical conclusion here is that butt is more beneficial than ass. LMBO is very popular with the homeschooling sector.