Stumpy says that the show is poorly written. He's talking about a show where he is constantly abused and bullied.
Kaeloo says that Mr. Cat's paws smell bad. In "Let's Play Peace, Man", Mr. Cat is seen scratching his armpits with his bare hands.
Fridge Horror
As if Kaeloo making fun of Mr. Cat for his self-esteem issues in front of other people wasn't bad enough already, this episode takes place after Episode 86.
Imagine what would happen if someone like Mr. Cat or Olaf were to figure out how to hack the show's animation.