What is the wife making fun of?
The wife was making fun of the Knight, her newly wedded husband. This was because after they privately got married that morning, her husband hid himself all day because his wife was old and ugly. When nighttime came the knight was still under much distress, and in bed all he did was toss and turn. This prompted his wife to make fun of his situation because she could tell the reason behind his woes. She sarcastically asked her husband if that was the way all newly wedded knights behaved towards their wives or there was a royal decree that prompted such behavior. She questioned her husband about past events including when she saved his life. She wanted to know what bothered her husband and suggested if amends were possible she would make them, much to the husband’s disbelief.
His old wife lay there smiling at him, though, And said, "Dear husband, benedicite! Acts every knight toward his wife this way? Is this the law of great King Arthur's house?