Shama-il Tirmidhi Chapter 034, Hadith Number 007 (222).

Abdullah ibn Masood radiyallahu anhu said, I know the person who will come out last from the fire. He will be such a man who will crawl out (due to the severity of the punishment of Jahannam he will not be able to walk). He will then be ordered to enter Jannah. He will go there and find that all the places therein are occupied. He will return and say, O Allah the people have taken all the places. It will be said to him. Do you remember the places in the world? (That when a place gets filled, there remains no place for a newcomer. And a person that arrives first occupies as much as one pleases, there remains no place for the ones that arrive later. The elders have translated it in this manner. According to this humble servant, if the meaning of it is taken as follows, it seems more appropriate, that do you remember the vastness and plentiness of the world and how big the world was. He is being reminded, because an announcement is going to be made that a place that is ten times greater than the world shall be given to him. After imagining the vastness of the world once, it may be assessed how great this gift is?). He will reply, O my creator, I remember well. It will be commanded to him. Make your wish in whichever way your heart desires. He will put forward his desires. It shall be commanded. All your desires are fulfilled and in addition ten times the size of the world is granted to you. He will reply, Are you jesting with me O my Allah, and You are the King of the Kings? (There is no place in Jannah and You are granting me a place ten times greater than the world). Sayyidina Ibn Masood radiyallahu anhu said, I saw Rasoolullah sallallahu alaihe wasallam laugh till his mubarak teeth showed, when he related this portion of the mans reply.

Commentary
The laughing of Sayyidina Rasoolullah sallallahu alaihe wasallam was due to his happiness on granting His Mercies and Bounties on a person who is the last to be taken out of Jahannam. From this it is clear that the person was the most sinful (Muslim). Yet he was so greatly rewarded in this manner. What about the general Muslims, and especially the pious, what great Mercies and Bounties shall be showered on them? The more bounties the Ummah will receive, the more it becomes a reason for Sayyidina Rasoolullah sallallahu alaihe wasallam to become happy. It is possible that Sayyidina Rasoolullah sallallahu alaihe wasallam laughed, because that person, who after experiencing the great hardships and punishment, came out of Jahannam. Yet he had the audacity to express his desires and also say that Allah was joking.