Lear's Fool has many functions in the play. He serves as a sort of chorus. He provides some comedy. He is a companion to Lear and thereby enables Shakespeare to have the King express his thoughts and feelings in dialogue. Additionally, the Fool serves to represent all of Lear's other retainers. Goneril confronts her father in Act 1, Scene 4 with this accusation:
Not only, sir, this your all-licensed fool, But other of your insolent retinue Do hourly carp and quarrel; breaking forth In rank and not-to-be endured riots.
Shakespeare could not show Lear's one hundred knights misbehaving on the stage. It would have been awkward, as well as expensive, even to stage a scene with a dozen knights carousing. And anyway, Lear claims that his knights are perfect gentlemen. So Shakespeare probably preferred not to demonstrate either good behavior or rowdy behavior by Lear's "retinue." Instead he uses the Fool to represent that entire retinue. And the Fool, since he is apparently "all-licensed," can be as disrespectful to Goneril as he wants. Thus the Fool is demonstrating to the audience the kind of behavior of which Goneril accuses Lear's one hundred followers. The audience probably believes that the truth lies somewhere between Goneril's description of Lear's retinue and Lear's defense of them. It is hard to believe that one hundred vigorous young soldiers would behave with perfect propriety, especially when Lear himself, enjoying his second childhood, was setting them a bad example. No doubt they all consumed a lot of wine and ale with their meals, and there must have been a lot of loud laughter, joking, and bawdy conversations in which the Fool was a major participant and therefore a plausible representative of the entire retinue.