What actually happens to glass when it is being etched with a CO2 laser?

Unlike abrasive etching (sandcarving), which physically removes glass from the surface of glass, and also deeper into glass, the CO2 laser etches glass using intense and concentrated heat. A CO2 laser beam is focused on the surface of the glass and the intense heat created instantly vaporizes a small amount of glass, causing a frosted look. Under a microscope, the surface of the glass has actually been fractured, which then starts a surface chipping action. This microscopic chipping action continues for several days until the stress that was induced into the glass by the laser beam gradually dissipates. Extremely small layers of glass (known in the glass industry as “oysters”) actually peel off the glass surface. 

If you take a wet, dark-colored cloth and wipe it over the etched glass, you will easily see a lot of very small chips of glass in the cloth. Be careful not to allow these chips to come in contact with your skin as they are extremely sharp. The best way to remove as many of these microscopic glass chips as possible is to rub the etched surface area thoroughly with fine steel wool #000 or #0000 grade using a gloved hand. This can be done dry or wet.

Occasionally, glass will break when being etched with a CO2 Laser. This normally happens when glass is not fully-annealed and the product still has internal stress in it. As soon as a CO2 laser beam hits this type of glass, the internal stress shatters the glass. Any products that require tempered glass cannot be laser engraved.

   —CrystalEdge