Huggy Wuggy and Kissy Missy had a baby.
They never gave him a name, so they just played cut the rope with him...
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Explanation
Explain Bear
Alright listen up, you dum-dum. So, Huggy Wuggy and Kissy Missy are, like, these scary toy characters, right? And the joke is that instead of naming their baby, they just "cut the rope" which refers to murdering someone by cutting them up with a rope. You probably think playing with rope is fun, huh? You're probably into that kinda thing since you're laughing at this...