The Laser Sight is a utility in Worms Armageddon and Worms World Party that enables laser targeting (shown via small red dots ahead of your worm) on the Shotgun, Handgun, Uzi, Minigun, Longbow and - oddly - the Kamikaze. This helps you in making long shots from long range by greatly improving your accuracy.
The Laser Sight returns in Worms 2: Armageddon and Worms Reloaded, not as a utility, but an on-or-off toggle-able option in custom schemes, and only effects the Shotgun.