In case anyone wants to see what other of Ellen's guests have participated in this bit, you can Google Ellen in Ear. It is a long running part of her show.
Even some British personalities have gotten involved including Adele, David Beckham, Harry Styles, and Emma Watson. Represented from the US is Kobe Bryant, Dennis Quaid, and Jennifer Aniston among others. Even the very professional and respected US journalist Ann Curry participated.
Here in the US, where the show is aired, it IS funny. If the target audience didn't think so, Ellen would not have continued it with so many guests all these years. Since Ellen is not a UK show, I can't imagine why anyone would think she would need to cater to a UK audience.
It is a play on the very famous and long running show, Candid Camera. That US show ran off and on from 1947 to 2014. The UK itself had a Candid Camera show that ran from 1960 to 1976. So it was obviously popular in the UK for a time as well.
Also, for those who did not know about the derogatory name Ellen was called, Reverend Jerry Falwell and Pat Robertson called her that and signed a letter saying that Ellen and the show was a blatant attempt to promote homosexuality. She received death threats and the studio got a bomb threat.
Ellen coming out on her TV show in 1997 was a huge leap for the rights of homosexuals in the late 90's and the world would not be where we are today with acceptance and rights for the LGBTQ+ community without her.