He was mocking Rey.
He was arguing to Rey that he wasn't the savior she thought he was, and he wasn't going to return and go defeat the First Order on his own.
He mis-identifies the lighstaber to mock the idea that he could take down the whole army with his weapon.
Laser sword is the way somebody who is unfamiliar to a lightsaber might refer to one, so it emphasizes the lack of knowledge someone would need to have to expect him to defeat the First Order.
scifi.stackexchange.com/users/91253/Mr Nick
He tries to remove the lightsaber's mythical image.
The term lightsaber implies a lot of things beyond the actual technical device.
For example, it is a part of the Jedi religion, it is a weapon of mythical reputation, it is the weapon that great heroes fought their heroic battles with.
Luke wants to make Rey understand that everything beyond the apparatus itself is pure imagination, so he calls the lightsaber by a name that describes the device, but lacks context, to relativize her associations regarding the weapon.
It's a bit like calling, say, Excalibur, an “old sword”.
It's aimed at removing properties of the device which are – in Luke's opinion – not real, and thereby questioning the validity of the Jedi religion that he has become disillusioned with.
scifi.stackexchange.com/users/349/Felix Dombek
Remember that we open with Rey handing Luke the lightsaber (i.e. the end of The Force Awakens ) and Luke tosses it behind him and walks away without saying a word, much to Rey's astonishment Luke doesn't want anything to do with Rey, or rebellions, or Jedi.
He's now a crotchety (and snarky) old man.
Mocking Rey by disparaging the lightsaber is a way to discourage her so she'll leave him alone.
scifi.stackexchange.com/users/62709/Machavity
George Lucas often referred to them as "laser swords."
The phrase was also used in Phantom Menace by Anakin, referencing Qui Gon's lightsaber.
I think we can infer that both phrases are used in-universe.
scifi.stackexchange.com/users/93907/Noxex
I thought it might have been a tribute to Lucas who called a light saber a laser sword, a lot.
Or, it might have been his disdain for the weapon on the director’s choice to portray the character.
He was entirely bitter against the force and the Jedi at that point.
Could have been both.
scifi.stackexchange.com/users/93900/Jeff
In  The Last Jedi , I thought it was a little odd that Luke referred to the lightsaber as a "laser sword".  Given that the lightsaber identifies a Jedi, why did he refer to it as such?
Why did Luke call the lightsaber by a different name?
scifi.stackexchange.com
<star-wars><lightsaber><the-last-jedi>
scifi.stackexchange.com/questions/176803
scifi.stackexchange.com/users/4636/Tim Reddy
It's possible to infer that both terms, "lightsaber" and "laser sword", are used. However, in this case Luke calls the lightsaber a "laser sword" because he is mocking Rey. As a side note, it is also possible that it was a tribute to George Lucas, who referred to them as laser swords. Luke used the term 'laser sword' to show his disdain for the Jedi and his rejection of the idea of resuming his old ways. The term was also often used by Geroge Lucas, however, so it can also be seen as a tribute to him, or as both of these.
Luke was doing it to mock Rey and thereby ridicule her suggestion that he might join her with his lightsaber in fighting against the old enemy. It could have been a tribute to George Lucas, who used the term laser sword, or it could be a way of showing his bitterness towards the Force and the Jedi, or a combination of these. It could have been both.