I do not know the medical reason. I have an opinion, however.
Tickling is a minor irritation of the nerve endings. Nerves in the skin are designed to determine touch sensation and pain. Since the tickle intensity is less than pain, but more than a grazing touch, the brain is confused, and doesn't know how to process the input.
Therefore, the result may be a "nervous laugh" reaction. Some people claim not to be ticklish--stating that it's a mind-over-matter situation.
Those who are the most ticklish usually say that being tickled, while certainly not painful, is not pleasant, either, supporting my 'nervous laughter' theory.