That's...
I've not considered "that's" for its humorous content before...
I assumed it was a contraction... but what if it is possessive? The joke belongs to that? Maybe that is how come i don't understand it, some sort of inside joke of that? No wonder i don't get it.
If only it were a contraction, for then i could replace it with that is.. That is the joke... And now i am perplexed. Ga what is so funny about that? It has a hat... Funny hats maybe?