Husband's Challenge

The humor comes from the wife's response. It's a backhanded compliment because while having the 'biggest penis' is generally seen as a positive thing, the statement implies that the husband's friends are inferior and that the husband's 'best' quality is his penis size, potentially indicating shallowness in social comparison, thus making the husband both happy and sad. The use of the word 'friends' also adds a bit of insult to the husband's ego.