Hilariously means in an extremely funny way. If something is hilariously funny, people laugh a lot — more than “quite funny.” Speakers also stretch it: hilariously bad means so bad that it becomes funny, like a film or a mistake you cannot take seriously. It is a strong, colourful adverb; in the quietest everyday talk people often just say so funny or really funny. It is not rude, but it is not a small word either. You use it to tell how something happens or how funny it is, not as a name for a person.