The performance is funny because it is so overdone, both in the lines the players must deliver and in the players' performances.  Both are ludicrous. The Prologue goes to extremes in his description.  He tells the audience that one man is playing a wall (Act 5, ll. 138-140).  The Prologue's exaggerated use of alliteration, in ll. 155-156, "...with bloody, blameful blade, / He bravely broached his boiling, bloody breast," further leads to humor.  Nick Bottom's overacting also lends to the humor of the play within the play.  He is a pompous self-absorbed character and that makes him funny.  When Bottom, as Pyramus, speaks for the first time, he preceeds almost every phrase with, "O," to achieve what he believes to be more drama and flair (Act 5, ll. 179-193) and repeats the word, "Alack!" three times in that speech.  Bottom's dying speech is as ridiculous as his opening speech and it takes him a long time to die (Act 5, ll. 315-322).