Exaggeration Satire
Sometimes things are just funny because they're so true. When we stretch or exaggerate the truth it can become a whole lot more entertaining. It's like those silly characterture drawings where the people have big heads and totally over exaggerated features. When someone has a slightly larger than average nose the artist will often draw their noses much much larger than it actually is in proportion to the rest of their head. This is what makes the picture funny!
Exaggeration satire is funny because its taking a blatant truth and making it a much bigger deal than it actually is. Let's say, for example, that you took your dog for a walk and he urinated on a stranger. Maybe it was a drop or two that landed on his shoe. When you go to tell that story to your friends, wouldn't be much funnier if you exaggerated a bit? You could say that the dog wet all over the person until they were drenched in dog urine.
Now THAT'S funny!