The commentary here says more than the verse itself. Do not make bad jokes. The author is not advising us to avoid bad puns, but is referring to malicious sarcasm. Don't make fun of other people in ways that would bring pain to their hearts. The temptation is especially strong when it entails the double satisfaction of disparaging another person and exalting ourselves at the same time by showing off our cleverness. Those of us prone to this type of humor need to address this by changing the conditioning of our speech. All types of harsh speech should be abandoned to avoid harming ourselves and others as well.
Excerpted from: The Seven-Point Mind Training(first published as A Passage from Solitude : Training the Mind in a Life Embracing the World), by B. Alan Wallace. Copyright 1992 by Snow Lion Publications, Ithaca, New York 14851.
This site provides an on-line database of commentaries on the Tibetan Buddhist meditation practices of lojong (Mind Training) and tonglen.