This is, actually, Truth in Television; in the final rounds, occasionally the judges will throw a straightforward word at a contestant in order to make them second-guess themselves. Most spellers will ask for a definition and a sentence, just in case.
Audience participants are told to ask for a definition and a sentence, regardless of whether they feel they need one.
Generally, the definition and/or sentence for every word will lead to laughter:
Mexican: "Someone from Mexico, OR an American slang term for anyone from Puerto Rico, Brazil, the Dominican Republic, or Spain." "Guacamole, the Mexican pudding."
"In the schoolyard, Billy protested that he wasn't cockeyed. 'I suffer from strabismus!' he said, whereupon the bullies beat him harder."
"Billy, put down that phylactery! We're Episcopalians!"
Halfway through "I'm Not That Smart" the singer totally derails from the topic (promptly forgetting the word he's supposed to spell):
Leaf: I like my hair/Really, it is pleasant to the touch/I toss my hair/A bit too much/It doesn't move/It simply sits/I make a part/I'm not that smart
Rona tries to give Olive advice on how to "stand like a champion," declaring it a "hard age for girls." Cue Leaf falling out of his seat for no reason.
The Serious Business attitude with which everyone approaches the bee is inherently funny, like in "My Unfortunate Erection" wherein Chip laments making a fatal technical error while being distracted by the onset of puberty:
Chip: Anyone for buying the shit that I'm selling/Because my stiffy has ruined my spelling?
The moment where, to give his daughter an advantage, Logainne's Carl Dad pours Coke on the floor to keep Barfee's "magic foot" from working. Not only does he treat it like Serious Business, but Barfee also tries to put Rona's hand sanitizer on his foot.
The conversation she has with her father is cruelly funny, bordering on a Black Comedy Burst.
Logainne: I don't have a magic foot.
Carl Dad: Or a mother.
There's also the flashback to one of the drills Carl Dad does with her, causing Dan Dad to come in and say she needs a break because she doesn't function well on low blood sugar. Carl, irritated, tells Dan that the bee goes on for three hours and she needs to build up stamina. Dan immediately counters that Carl is the absolute last person who should be talking about stamina.