Laser-assisted directed energy deposition is an additive manufacturing process used to manufacture metallic parts. The gas porosity is one of the prominent deposition defects in the processed parts. This influences the mechanical properties which can cause the part failure. In this work, the mechanism of gas porosity formation at low energy density is addressed using computational modeling. An investigation is carried out to capture the powder particles interaction with the melt pool and resulting porosity formation, molten pool hydrodynamics, and solidification microstructure in the L-DED process. The numerical results reveal that the stagnant zone in the melt pool leads to entrapment of bubbles which eventually forms porosity. This bubble entrapment phenomenon is studied by varying the powder mass flow rate, and it is found that increasing the mass flow rate results in rapid bubble formation which increases the chances of gas porosity formation. The temperature gradient and cooling rates are used for solidification analysis and prediction of as-solidified grain morphology. Using the empirical relation, the effect of local thermodynamic solidification conditions on the size of the dendritic microstructure is analyzed. The predicted melt pool geometry and porosity morphology agree with the experimental results.