Carl Trueman, Luther on the Christian Life: Cross and Freedom (Crossway, 2015), 198–199:
In general terms, of course, Protestant theologians have not been renowned for their wit, and Protestant theology has not been distinguished by its laughter. Yet Luther laughed all the time, whether poking fun at himself, at Katie, at his colleagues, or indeed at his countless and ever increasing number of enemies. Humor was a large part of what helped to make him so human and accessible. And in a world where everyone always seems to be “hurt” by something someone has said or offended by this or that, Luther’s robust mockery of pretension and pomposity is a remarkable theological contribution in and of itself.
Humor, of course, has numerous functions. It is in part a survival mechanism. Mocking danger and laughing in the face of tragedy are proven ways of coping with hard and difficult situations. Undoubtedly, this played a significant role in Luther’s own penchant for poking fun. Yet I think there is probably a theological reason for Luther’s laughter too.
Humor often plays on the absurd, and Luther knew that this fallen world was not as it was designed to be and was thus absurd and futile in a most significant and powerful way. Thus, he knew that life is tragic. It is full of sound and fury. It is marked by pain and frustration. The strength of youth must eventually fade into the weakness of old age and finally end in the grave. We believe ourselves to be special, to be transcendent, to be unique and irreplaceable.
And yet the one great lesson that everyone must ultimately learn in life is that they are none of these things, however much we want them to be true and however much we do things to trick ourselves into believing our own propaganda. We are fallen, finite, and mortal. We are not God. And because God is and has acted, because in incarnation, Word, and sacrament he has revealed and given himself and has thus pointed to the true meaning of life, our own pretensions to greatness are shown to be nothing but the perilous grandstanding of the absurdly pompous and the pompously absurd.