Satire can be defined as a brand of humor used to expose stupidity and human vice, especially among the high and mighty in a given society. Indeed, satire is particularly effective when it is used against those in positions of power and prominence, such as politicians.
This is the approach adopted by George Orwell in Animal Farm. Using the outward form of an animal fable or fairy-tale, Orwell exposes the Soviet Union under Stalin for its brutality, corruption, and serial incompetence. He does this by making Napoleon and his underlings look utterly ridiculous as well as just plain evil.
For instance, we have the ludicrous speeches of Squealer, the regime's propagandist-in-chief. His willful distortions of the truth are so outrageous, so completely blatant in their attempts at gaslighting, that one can only laugh at him, while at the same time acknowledging the seriousness of the threat to the other animals that his brazen lies represent.
Irony is a very important element in satire, and there are numerous examples in Animal Farm. A classic example of irony comes right at the end of the story, when it becomes impossible to tell the pigs apart from the humans. This is because the pigs have become more and more human as the story has progressed despite their ostensible commitment to the political philosophy of Animalism.
What Orwell is doing here is to satirize the way in which the Soviet Union under Stalin, despite its supposed commitment to establishing a workers' state, has actually become every bit as ruthless and exploitative as the capitalist states it claimed to be against.