Here is the nerdy explanation =)
My textbook answer altered with my words. yes i am a geek!
Physiologically, The receptors which sense tickling are called nociceptors or the same receptors for pain, pressure and vibrations. They are most concentrated in places where we are ticklish. Touch and pain are two of our general senses, referred to as
tactile sensations.
Pain, after all, is a violation of physical integrity and comfort; these are principles which we certainly care about quite viscerally. Pain is essentially a sensory representation of a violation of one's body's natural order. It represents V, a violation of moral principle, reduced to the level of a physiological response to a physical stimulus. Tickling kind of sends your brain mixed signals which might explain why we laugh. Neuro-scientists and Physiologists still can not understand exactly why we laugh. The signal is sent from the receptor to the brain, via nerve fibers, where the information is processed. The central nervous system gives a different signal to react to the stimulus accordingly.
The receptors that are responsible for touch are called
mechanoreceptors.
Touch sensations(like from a massage), on the other hand, provide an internal representation of the external, touched stimulus for the organism to process. This representation of the stimulus is painless by itself; it is a representation of a normal contact with a stimulus, N.
However, when we are being tickled we are feeling a simultaneous excitation of
both touch and pain receptors. This is perhaps what would send a mixed signal to the brain. Since the sensation of tickling is so chaotic (not for me anyway

); our system does not know quite how to respond so laughter, anger or even tears result. The body gets confused.
Aside from the receptors in our skin responsible for sensing stimulus the part that is most important in how we respond is the brain, more specifically the
amygdala. The amygdala is the portion of the brain that elicits an emotional response. Before the cortex can process the information or think about what to do we automatically "fight or flee."