The basis of the humour in this scene lies particularly in Mercutio's witticisms and the use of ambiguity and puns when he speaks to Romeo and later, to the nurse.
When Romeo arrives and apologises for misleading them by giving them the slip (slipping away from their company), Mercutio comments that:
That's as much as to say, such a case as yours
constrains a man to bow in the hams.
He makes fun of Romeo by suggesting that it is easy for Romeo to say but, sarcastically a (sad) situation such as Romeo's, forces a man to be overly courteous - so much so that he bows very deeply. In other words, an almost servile obedience. Romeo interprets this as giving a curtsy (play on courtesy).
Their continued talk is filled with further word-play and witticisms. Mercutio says that Romeo got it right (the definition of courteous) and Romeo retorts that Mercutio has given 'a most courteous exposition' - further wordplay. He means that Mercutio has most kindly explained the word - obviously there's a slight hint of sarcasm here as well.
Mercutio's reply that:
Nay, I am the very pink of courtesy.
Romeo understands 'pink' as meaning 'flower' - in other words, Mercutio is the epitome of courtesy. As a flower puts on a show with its petals and colours to impress, so does Mercutio with his 'courtesy'. when Mercutio agrees to this definition, Romeo jests further that his shoe in this regard is therefore 'well-flowered'. The audience would surely laugh at this remark since the foot would be used to kick an offender in the bottom or such sort.
Mercutio displays further wit saying that Romeo should extend the joke until it is worn out (has become stale) and only the bare foot is left. There would probably be more laughter since Mercutio is referring to both the literal and figurative.
Romeo, however, seems to have grown tired of the joke already and wittily implies that the joke is for dumb people only.
O single-soled jest, solely singular for the
He says that the joke is silly and only unique because it's the only joke that Mercutio knows. Mercutio feints being hurt by this remark and turns to Benvolio to intervene.
Come between us, good Benvolio; my wits faint.
he means that he is losing his sharpness (wits). Romeo, however, seems to now have warmed up to the challenge and wants to match his wit against Mercutio's. Mercutio, however does not want to enter into a 'wild goose chase' with Romeo and acknowledges that Romeo has more wild goose in one of his wits than he has in his whole five (a reference to the five senses).
The humorous play continues with the word 'goose' now being the pun. Mercutio asks Romeo if he identifies with the word goose - obviously a derogatory term, but Romeo declares that whenever Mercutio had been with him, he (Mercutio) was the goose. Mercutio says that he would bite Romeo's ear for that remark - indicating his pleasure. He further says that Romeo's wit is biting, on which Romeo replies that it is the perfect sauce to be served with goose. This would obviously make the audience laugh as well, since Mercutio, metaphorically is the goose.
The two continue their verbal duel until they are interrupted by the arrival of the nurse and Peter. This event also leads to a number of rich and bawdy witticisms being offered by all three, somewhat to the chagrin of the poor nurse who has only come to do her duty and convey an important message to Romeo.
This whole repartee concludes